The question of whether one should buy a car under a company name or an individual name has always left many wondering. Here are the pros and cons of both options.
Buying a company car can be a good choice and not complicated. However, there are benefits to the other option, because even if you need a car because of your job, you still need a car for your own. Let's find out with Philkotse.com right now!
Should I buy a car under a company name or individual name?
1. Why it is a good idea to buy a car under a company name?
Buying a car is like investing in a property that you can sell it in the future. If you buy it on our own, you have a lot of samples of the car to choose from.
Meanwhile, if you buy a car under a company name, you can only choose some of the certain samples, or you can‘t choose the fashion supercars or convertible cooper. Besides, there is a limit on the size of the engine.
Buying a car is like investing in a property that you can sell it in the future
Even if you are a senior manager, CO2 emissions or safety rating will also affect the list of vehicles you have chosen - both factors can affect the cost quite significantly.
In addition, when buying a car for personal use, you are free to choose between diesel or gasoline. Meanwhile, with a car under the company name, you can only select diesel engines.
>>> Read more: Do's And Dont's: Essential Guidelines In Buying Your First Car.
2. How much can I get if I buy a car under the company name?
The money you get will be equal to the amount your boss pays for renting a car. This number may vary, depending on the method of calculation and for each employee. If you would like to know how much money you have received, ask your manager, HR department or welfare policy officer.
The money you get will be equal to the amount your boss pays for renting a car
Once you know the amount you receive, keep in mind that this amount will be added to your annual salary, so your personal income tax will increase. That means the money spent on buying a car will be less.
For example, a 40% taxpayer receives a £ 5,500 car allowance, which can only leave £ 3,300 after tax. You will not only need to save money to buy your own car but also pay for insurance, maintenance costs, and tax on traffic.
3. How can I buy a car when having not enough money?
You can find a lot of financial support in the market. The simplest option is a bank loan or rental agreement. Once you pay the full amount every month, the car will be yours.
If owning a car is not your concern, you can look at individual lease contracts, as well as personal contract purchase agreements (PCP). Both are cheaper than bank loans. With a rental or personal lease, you must pay a deposit in advance with a monthly payment, and return the car at the end of the term.
When you cannot afford a car at the moment, the simplest option is a bank loan or rental agreement
PCP is similar; however, when the contract expires, you can buy the car, based on the value of the car (agreed in advance). This value is influenced by the number of miles traveled, as well as your monthly payments; So estimate as accurately as possible.
You will need to spend a lot of time finding a proper PCP or suitable lease contract, as there are many options. You will see a difference in your deposit, contract period, and insurance coverage. Finding a more expensive or cheaper car to rent is quite complicated because the price depends on the popularity of the car and the resale value.
>>> Worth your attention: When is the right time to buy a new car?
4. What other costs to consider?
One of the prerogatives of a PCP or rental agreement is that you can pay all your costs for all the services, maintenance and support on the road. That means you will not have to worry about buying a personal car.
You can choose the service package when you select the rental agreement. However, if you take a loan from a bank, you will need a budget for this service as well as available reserves.
In the meantime, if you buy your own car, you will also need a budget for insurance, tax on traffic, roadside assistance and repair as needed.
If you take a loan from a bank, you will need a budget for this service as well as available reserves>>> Also check: How to Save on Insurance Premiums When Buying a Car.
5. Is it simpler to buy a car under the company name?
When buying a car everything under the company name, you will not need much research and planning. Many employees choose company cars because the company will take care of everything.
However, this will probably affect your income tax. In the meantime, if you spend time looking, you would get a great car for your own by using financial support services or by cash.
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