Employer Vehicle Allowance

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
absolute zero
Posts: 1219
Joined: Thu Dec 29, 2016 4:59 pm

Employer Vehicle Allowance

Post by absolute zero »

I started a job this week with a new employer. Prior to accepting this job offer, they sent me an offer letter that included a section which outlined their vehicle allowance policy. To compensate for mileage put on personal vehicles, they provide a $750 monthly stipend to employees (to cover gas, maintenance, wear and tear, etc). Upon starting work this week, I inquired about the stipend and found out that to be eligible, an employee must have a vehicle with less than 150,000 miles and less than 5 years old. There is a form I must submit for my manager and HR to sign off in order for me to receive the stipend, and the form specifies these requirements. I was not aware of these stipulations when accepting the job offer. My vehicle is 12 years old.

I'm trying to determine a course of action and looking for input from the group. I'm considering asking that an exception be made so that I can receive the vehicle allowance, OR that my salary be adjusted upwards by the amount of the allowance. Truthfully, I have found from my speaking to my coworkers that they actually put minimum mileage on their vehicles (they maybe use their vehicles for work related purposes once a month). But still, I view this as compensation that was promised to me and feel that I was somewhat misled. And it's hard to envision that there's any business rationale behind it, since we don't have "clients" that need to be impressed or anything of that nature.

I'm wondering, if you were in my shoes, would you make the same request (salary increase of $750/mo)? Any potential pitfalls that you think I should be aware of? I'm trying to be cautious as I relocated my family for this job and have a lot riding on this. Yet at the same time I want to feel that I'm being treated right, and $750/mo is a lot of money.

Thoughts?
sec_vol
Posts: 18
Joined: Tue Sep 13, 2016 10:19 pm

Re: Employer Vehicle Allowance

Post by sec_vol »

Does your spouse's car have less than 150k and under 5 years on it?
Topic Author
absolute zero
Posts: 1219
Joined: Thu Dec 29, 2016 4:59 pm

Re: Employer Vehicle Allowance

Post by absolute zero »

Unfortunately spouse’s car is almost as old as mine - about 10 years old. One option is to buy a vehicle to qualify for the stipend. But honestly we both like our current vehicles and they both have been reliable for us. And we don’t have a lot of cash floating around at the moment to buy a new vehicle.
VoiceOfReason
Posts: 291
Joined: Sat Jan 02, 2016 6:54 pm

Re: Employer Vehicle Allowance

Post by VoiceOfReason »

This is standard practice for employees w a vehicle stipend. The expectation is that you have a late model car w low miles that is both professional looking and reliable.

It’s still a great deal for you. Buy a used Ford Fusion or similar and you will be well ahead. It also gives u flexibility to get a luxury car and offset the costs. (Which is attractive to some people)

Having said all of that, you should never have viewed it as compensation. It’s to offset the costs of having a vehicle to use for employment.
Last edited by VoiceOfReason on Fri Aug 05, 2022 3:02 pm, edited 1 time in total.
User avatar
JoeRetire
Posts: 13315
Joined: Tue Jan 16, 2018 2:44 pm

Re: Employer Vehicle Allowance

Post by JoeRetire »

absolute zero wrote: Fri Aug 05, 2022 1:30 pm I'm wondering, if you were in my shoes, would you make the same request (salary increase of $750/mo)?
You can ask for anything you like. Be prepared for when they say "No".

Do you happen to know why the mileage and age requirements are in place? Do you drive customers around?

For me, I would ask about it politely. But if denied, I'd just wait until the time in the future when I purchased a new car.
Any potential pitfalls that you think I should be aware of? I'm trying to be cautious as I relocated my family for this job and have a lot riding on this. Yet at the same time I want to feel that I'm being treated right, and $750/mo is a lot of money.
Would you have accepted the job if there was no vehicle allowance? For $750/mo could you lease a car and sell yours?
This is gonna be my time. Time to taste the fruits and let the juices drip down my chin. I proclaim this: The Summer of George!
Paladin23
Posts: 5
Joined: Sat Nov 09, 2019 8:20 pm

Re: Employer Vehicle Allowance

Post by Paladin23 »

Note that a $750 vehicle allowance is exactly the same as a $750 salary increase- it is fully taxable in most cases, so it really is already simply an increase in taxable income.
Laundry_Service
Posts: 314
Joined: Wed Sep 15, 2010 11:52 am

Re: Employer Vehicle Allowance

Post by Laundry_Service »

Do you submit a mileage expense report instead of the $750 per month or do they expect you to drive and get nothing? Still a bummer if you don't drive much to get reimbursed for the miles. Do you work for a megacorp or will they see you and your vehicle on a regular basis?

I think an exception is a fair ask especially with the vehicle supply issues.
BV3273
Posts: 858
Joined: Mon Oct 19, 2015 7:20 pm

Re: Employer Vehicle Allowance

Post by BV3273 »

You can ask but be prepared to hear “No”.

In my experience those policies are pretty cut & dry.

In the past one company I worked for provided cars, since I already leased a vehicle prior to joining they paid me my lease payment every month until the lease was up. Then I had to take their car.
PaunchyPirate
Posts: 828
Joined: Sun Nov 30, 2014 7:58 pm

Re: Employer Vehicle Allowance

Post by PaunchyPirate »

I also think this is a pretty standard requirement to get the allowance. I doubt a sizable employer is going to permit an exception. A smaller one might. I would either figure out the plan to update your car or adjust to not having the $750 or consider other employment.

Also, I suggest you never assume you will always have the car allowance. It can be taken away due to a change in company policy — perhaps as a cost savings measure. My car allowance (and that of hundreds of my coworker peers) was discontinued with 30 days notice several years before I retired. There was no adjustment in compensation to make up for it. We were free to quit our jobs if we did not like it.
Topic Author
absolute zero
Posts: 1219
Joined: Thu Dec 29, 2016 4:59 pm

Re: Employer Vehicle Allowance

Post by absolute zero »

JoeRetire wrote: Fri Aug 05, 2022 3:00 pm You can ask for anything you like. Be prepared for when they say "No".

Do you happen to know why the mileage and age requirements are in place? Do you drive customers around?
I didn't get a clear answer when I asked about why the mileage/age requirements are in place. I do not drive customers around. In fact, we really don't have customers of any sort (hard to explain how that's possible, without sharing the exact type of work I do).
JoeRetire wrote: Fri Aug 05, 2022 3:00 pm For me, I would ask about it politely. But if denied, I'd just wait until the time in the future when I purchased a new car.
Thanks. I guess this is all that I can do. It's not like I have much leverage at this point.
Topic Author
absolute zero
Posts: 1219
Joined: Thu Dec 29, 2016 4:59 pm

Re: Employer Vehicle Allowance

Post by absolute zero »

Laundry_Service wrote: Fri Aug 05, 2022 4:08 pm Do you submit a mileage expense report instead of the $750 per month or do they expect you to drive and get nothing? Still a bummer if you don't drive much to get reimbursed for the miles. Do you work for a megacorp or will they see you and your vehicle on a regular basis?

I think an exception is a fair ask especially with the vehicle supply issues.
I asked (about getting mileage reimbursed instead) and got a wishy-washy vague response from my supervisor. So my impression is that the desire to reimburse for mileage isn't there, though perhaps I just need to press a little more firmly. I don't know. I agree with you, even if I only drive a couple hundred miles per month for work related matters, that's still going to irk me to be paying out of pocket.
User avatar
JoeRetire
Posts: 13315
Joined: Tue Jan 16, 2018 2:44 pm

Re: Employer Vehicle Allowance

Post by JoeRetire »

absolute zero wrote: Fri Aug 05, 2022 8:25 pm
JoeRetire wrote: Fri Aug 05, 2022 3:00 pm For me, I would ask about it politely. But if denied, I'd just wait until the time in the future when I purchased a new car.
Thanks. I guess this is all that I can do. It's not like I have much leverage at this point.
Unless you are willing to leave, you have no real leverage.
This is gonna be my time. Time to taste the fruits and let the juices drip down my chin. I proclaim this: The Summer of George!
Topic Author
absolute zero
Posts: 1219
Joined: Thu Dec 29, 2016 4:59 pm

Re: Employer Vehicle Allowance

Post by absolute zero »

VoiceOfReason wrote: Fri Aug 05, 2022 3:00 pm This is standard practice for employees w a vehicle stipend. The expectation is that you have a late model car w low miles that is both professional looking and reliable.
Good to know.
It’s still a great deal for you. Buy a used Ford Fusion or similar and you will be well ahead. It also gives u flexibility to get a luxury car and offset the costs. (Which is attractive to some people)
I suppose this can be done. That said, I currently drive an SUV and so swapping it out for a ford fusion would make shuttling around the family more challenging.
Having said all of that, you should never have viewed it as compensation. It’s to offset the costs of having a vehicle to use for employment.
Fair point. I will say, they featured it pretty prominently on the first page of their job offer. Hopefully HR yanks that from their offer letters at some point, because money aside, it's a lame way to start employment with a somewhat sour taste in my mouth. Oh well.
Parkinglotracer
Posts: 1374
Joined: Fri Dec 20, 2019 3:49 am
Location: Upstate NY

Re: Employer Vehicle Allowance

Post by Parkinglotracer »

On the bright side if they won’t budge it’s nice they will pay you to buy a new car. I wouldn’t pass that opportunity up.
User avatar
ClevrChico
Posts: 2666
Joined: Tue Apr 03, 2012 8:24 pm

Re: Employer Vehicle Allowance

Post by ClevrChico »

Parkinglotracer wrote: Sat Aug 06, 2022 5:48 am On the bright side if they won’t budge it’s nice they will pay you to buy a new car. I wouldn’t pass that opportunity up.
I feel the same way. Now would be a good time to sell the old car for top dollar, and then enjoy the new car.
dknightd
Posts: 3120
Joined: Wed Mar 07, 2018 11:57 am

Re: Employer Vehicle Allowance

Post by dknightd »

ClevrChico wrote: Sat Aug 06, 2022 6:22 am
Parkinglotracer wrote: Sat Aug 06, 2022 5:48 am On the bright side if they won’t budge it’s nice they will pay you to buy a new car. I wouldn’t pass that opportunity up.
I feel the same way. Now would be a good time to sell the old car for top dollar, and then enjoy the new car.
Agreed :)
Retired 2019. So far, so good. I want to wake up every morning. But I want to die in my sleep. Just another conundrum.
jebmke
Posts: 17061
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Employer Vehicle Allowance

Post by jebmke »

BV3273 wrote: Fri Aug 05, 2022 5:29 pm You can ask but be prepared to hear “No”.

In my experience those policies are pretty cut & dry.

In the past one company I worked for provided cars, since I already leased a vehicle prior to joining they paid me my lease payment every month until the lease was up. Then I had to take their car.
Exceptions to benefit policies are hard to defend when someone who doesn’t get the exception challenges. It is legally more defensible to just tweak basic compensation up to cover something that is an outlier.
When you discover that you are riding a dead horse, the best strategy is to dismount.
InNameOnly
Posts: 49
Joined: Fri Jul 30, 2021 12:40 am

Re: Employer Vehicle Allowance

Post by InNameOnly »

ClevrChico wrote: Sat Aug 06, 2022 6:22 am
Parkinglotracer wrote: Sat Aug 06, 2022 5:48 am On the bright side if they won’t budge it’s nice they will pay you to buy a new car. I wouldn’t pass that opportunity up.
I feel the same way. Now would be a good time to sell the old car for top dollar, and then enjoy the new car.
Here is your glass of lemonade.
The realist says the glass is completely full with 50% water and 50% air.
vxdx
Posts: 55
Joined: Thu Jan 06, 2022 5:06 pm

Re: Employer Vehicle Allowance

Post by vxdx »

absolute zero wrote: Fri Aug 05, 2022 8:29 pm I asked (about getting mileage reimbursed instead) and got a wishy-washy vague response from my supervisor. So my impression is that the desire to reimburse for mileage isn't there, though perhaps I just need to press a little more firmly.
The policy could have been more clear in the offer, but if you continue pushing it’s likely you’ll be starting off on the wrong foot with your supervisor.
Jack FFR1846
Posts: 15322
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Employer Vehicle Allowance

Post by Jack FFR1846 »

Ask for the complete list of requirements. Your list makes me think you took a job where I used to work. The hiring manager took me to lunch to interview me and made it very clear what the car plan requirements were. At the time, we had 4 cars in our family and not a single one met the plan. Let me rattle the specs off that I had to meet:

5 model years old or less
4 side opening doors (so no mini vans)
No rear open cargo area (so no pickup)
No vehicles over 1/2 ton capacity
105" wheel base or longer.

Let me say this. You're crying over receiving a boat load of money. When I took this job, I negotiated a $10k signing bonus to be used towards the purchase of an acceptable car. I was also given 6 months to buy it. The company didn't just have this requirement, but required that a copy of the registration be sent in every year to show compliance. If an employee did not comply, they were given one warning and if they didn't have a car the next month, they were terminated. Since you knew very little of the required car plan requirements, I would warn you that your job could be in jeopardy if you don't buy a car.

While looking for a car, I owned a 2000 Audi S4. This is a really nice car (it was under 5 years old at the time) with fancy leather standard. But the wheelbase was something like 104.9". At the same time, the Dodge Neon, a small piece of garbage, small, unimpressive car in its second generation met the 105" wheel base. I contacted HR and asked them if they really required me to get a complying car like the Neon instead of the impressive S4 and they said yes. I ended up buying a no option 2004 Mazda 6i. The car had a 5 speed manual, no ABS and cloth seats. When it came down to it, nobody cared if I used it to go to customers or not and I drove my 2 seat sports car at times. I'm technical support and follow sales guys, so if we were bringing customers to lunch, we'd be in the sales guy's car or if we needed my seats too, I'd be notified ahead of time and I'd drive the Mazda.

$750 can easily buy a brand new, small car. Just be absolutely sure you meet ALL requirements first. And buy something you'd be happy to keep for the full 5 years.

edit: Something else this company did and you should ask about. They did car expense substantiation. What that does is documents your car expenses to be used against your car plan money and income so you don't have to do the work on your taxes. For a purchased car, IRS depreciation was used and multiplied by the % of business use. But if you leased a car, 100% of the lease payment was used. Several of the sales guys leased high end cars. Mercedes, BMW, Lexus. Us engineer peons tended to buy cars like my Mazda 6, Fusion (the same car for this generation), Maxima, Camry.
Bogle: Smart Beta is stupid
jebmke
Posts: 17061
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Employer Vehicle Allowance

Post by jebmke »

Jack FFR1846 wrote: Sat Aug 06, 2022 7:55 am Several of the sales guys leased high end cars. Mercedes, BMW, Lexus.
Interesting. When I headed finance for our sales organization I also managed the leased car fleet. At one point we introduced an allowance option (in lieu of company vehicle) but we had a hard rule about no beaters and no luxury cars. We didn't want customers to think we were financially strapped (beaters) or that our sales people were vastly wealthy (luxury); in the latter case, it is hard to negotiate higher prices on contracts if you roll up in a Bentley. Any other employee who might make ad hoc customer calls (like me) had to use a vehicle that met these guidelines.
When you discover that you are riding a dead horse, the best strategy is to dismount.
Jack FFR1846
Posts: 15322
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Employer Vehicle Allowance

Post by Jack FFR1846 »

jebmke wrote: Sat Aug 06, 2022 10:11 am
Jack FFR1846 wrote: Sat Aug 06, 2022 7:55 am Several of the sales guys leased high end cars. Mercedes, BMW, Lexus.
Interesting. When I headed finance for our sales organization I also managed the leased car fleet. At one point we introduced an allowance option (in lieu of company vehicle) but we had a hard rule about no beaters and no luxury cars. We didn't want customers to think we were financially strapped (beaters) or that our sales people were vastly wealthy (luxury); in the latter case, it is hard to negotiate higher prices on contracts if you roll up in a Bentley. Any other employee who might make ad hoc customer calls (like me) had to use a vehicle that met these guidelines.
I've seen a ton of various car plans. Our rep in Canada required his sales people and field apps to tell him what car they intend to buy. Then he would travel to their territory and visit the dealer to see the exact car. Mid size was fine. Had to be a US brand. Could not be better than the owner's car.

The guys who leased high end brands were leasing cars like an E class Mercedes, BMW 3 series, Infinity G37....that kind of thing. When gas hit a peak of $3 a gallon back then, the policy changed to 104" wheel base if the interior volume exceeded 90 cubic feet and a ton of sales people who did lots of miles went for Civics and Civic hybrids.

I do remember when I was a customer and engineer, the local Linear Technology sales guy always had a new BMW 7 series and also invited customers onto his large boat. On another plane, the Exxar field apps engineer drove a Honda S2000. I won't complain as I would sometimes drive my Lotus Elise if I knew we weren't going to bring out customers anywhere. I kept a "virtual" mileage log as we were paid a monthly amount plus 1/2 the IRS mileage number.

My present car plan takes into account that some will drive a lot and some not at all, so I get a monthly amount, gas for business miles traveled and insurance cost with additional to cover tax. Pretty good as I haven't driven a mile for business in the last 2 years as a good number of customers have not allowed in person visits.
Bogle: Smart Beta is stupid
jebmke
Posts: 17061
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Employer Vehicle Allowance

Post by jebmke »

Jack FFR1846 wrote: Sat Aug 06, 2022 10:30 am
jebmke wrote: Sat Aug 06, 2022 10:11 am
Jack FFR1846 wrote: Sat Aug 06, 2022 7:55 am Several of the sales guys leased high end cars. Mercedes, BMW, Lexus.
Interesting. When I headed finance for our sales organization I also managed the leased car fleet. At one point we introduced an allowance option (in lieu of company vehicle) but we had a hard rule about no beaters and no luxury cars. We didn't want customers to think we were financially strapped (beaters) or that our sales people were vastly wealthy (luxury); in the latter case, it is hard to negotiate higher prices on contracts if you roll up in a Bentley. Any other employee who might make ad hoc customer calls (like me) had to use a vehicle that met these guidelines.
I've seen a ton of various car plans. Our rep in Canada required his sales people and field apps to tell him what car they intend to buy. Then he would travel to their territory and visit the dealer to see the exact car. Mid size was fine. Had to be a US brand. Could not be better than the owner's car.

The guys who leased high end brands were leasing cars like an E class Mercedes, BMW 3 series, Infinity G37....that kind of thing. When gas hit a peak of $3 a gallon back then, the policy changed to 104" wheel base if the interior volume exceeded 90 cubic feet and a ton of sales people who did lots of miles went for Civics and Civic hybrids.

I do remember when I was a customer and engineer, the local Linear Technology sales guy always had a new BMW 7 series and also invited customers onto his large boat. On another plane, the Exxar field apps engineer drove a Honda S2000. I won't complain as I would sometimes drive my Lotus Elise if I knew we weren't going to bring out customers anywhere. I kept a "virtual" mileage log as we were paid a monthly amount plus 1/2 the IRS mileage number.

My present car plan takes into account that some will drive a lot and some not at all, so I get a monthly amount, gas for business miles traveled and insurance cost with additional to cover tax. Pretty good as I haven't driven a mile for business in the last 2 years as a good number of customers have not allowed in person visits.
In some countries the car is an important sign. When I worked in Brussels the company leased me a car. They would not allow me to lease a car smaller than what I was permitted given my position because "it just would not look right." The plan was all-in including personal use; it was nuts but I have to say I did enjoy that car. Not something I'd pay for myself but it was comfortable and fast.
When you discover that you are riding a dead horse, the best strategy is to dismount.
Post Reply