Should You Provide Company Cars for Your Employees?

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  • Consider the cost and type of vehicles, purchasing or leasing options, and the total cost over time when offering company cars. 
  • Insuring company cars involves checking the state’s requirements and choosing a reliable provider with the best coverage and rate. 
  • Maintaining company cars entails providing necessary repairs, replacements, and other tasks, while liabilities include being responsible for damage caused to the vehicle.
  • Consider if the employee is licensed, and create rules and regulations on safely using company cars. 

Providing company cars for your employees can be an attractive perk for many businesses. But is it the right choice for your company? There are several factors to consider when determining whether to give out company cars, such as cost, insurance, maintenance, and liability. Take a closer look at these important points.

Cost of Vehicles

The cost of vehicles plays a major role in deciding if you should provide company cars. This is because you must consider the cost of buying and maintaining the vehicles. To help you with this aspect, here are some questions to ponder:

  • How many vehicles do you need?
  • What type of cars will fit the budget?
  • Are these cars reliable and fuel efficient?

You should also consider the following:

Will You Purchase or Lease Vehicles

Analyze the cost of purchasing or leasing vehicles that fit the needs of your business and employees. Choose to purchase if you plan to use the cars for a long period. Purchasing is also ideal if the vehicles are used only for business purposes. Leasing may be better if you need flexible terms or if your business is seasonal.

Calculate the Total Cost Over Time

This will give you an accurate estimate of the total cost over time. This includes calculated costs for gasoline, oil changes, repair and maintenance, insurance premiums, registration fees, taxes, and depreciation. Also, you can let your employees shoulder these costs, especially if they are using the cars for personal use.

Give a Loan Option

You can talk to or partner with a car provider for auto loan options as an alternative to providing company cars. This way, your employees can purchase their own cars, and you can pay for their won. You may even get group discounts with certain providers if you get multiple cars. This way, you’re freeing yourself from the burden of buying and managing cars and giving your employees the leverage to buy their own vehicles.

loan application

Insurance Requirements

Insuring company cars can be expensive depending on the type of vehicle, the employee’s driving record, and other factors like where and how often they are used. Here are ways to navigate this situation:

  • Check your state’s insurance requirements and ensure you meet those standards.
  • Choose a reliable insurance provider offering the best coverage and rate for each car.
  • Consider providing additional coverage such as liability, collision, theft, and other options.
  • Make sure that you are insured for all drivers of your company cars.

Maintenance and Liability

One of the factors to be considered when providing company cars is the level of maintenance and liability for each vehicle. Your responsibility as an employer will depend on how much control you wish to exert over the vehicles. Here’s a breakdown:


A company car entails providing the necessary maintenance to keep the car in good condition. This includes regular oil changes, repair and replacement of needed parts, and other similar tasks. You can also decide if you want your employees to shoulder the costs for this or not.


This means you will be responsible for any damage caused to the vehicle, including but not limited to accidents, vandalism, and theft. This can be costly, and you should consider how much coverage you need before providing company cars.

Other Considerations

Aside from the factors mentioned, you have to consider the other factors involving the employees using the company cars. These include:

If the Employee is Licensed

man with his driver's license

You must ensure the employee is a licensed driver with a valid license before driving your company car. This will protect you from any liabilities in case of an accident or other unforeseen circumstances. If the employee is a new driver, consider providing additional training.

Rules and Regulations

Establishing rules and regulations on how employees can safely use company cars is important. This includes adherence to local laws, speed limits, parking guidelines, no drinking, driving, etc. You must also include detailed information about the consequences of violating these policies.

Making the Decision

Providing your employees with company cars can be a great way to show appreciation and loyalty. Aside from this, it is also a convenient way to make sure your employees have reliable transportation for their work-related tasks. After considering all the factors mentioned and that you know that your employees deserve it, it’s time to give the green light to your company car plan!

Providing a comfortable mode of transportation for your employees is certainly an attractive perk. It can be very beneficial to the success of your business. Consider all the factors involved and decide if it’s the right choice for your employees. When done correctly, giving out company cars can be a great way to show appreciation for your employees!

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