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Before you buy that new company car, decide if you're willing to pay the price

by , 07 July 2014
If you've ever bought a car, you'll know they're not cheap assets. There's the cost of the car itself. For a nice new model with all the safety features, you're looking at upwards of R150 000. Then there's the regular maintenances each year which can cost between R1 000 and R6 000 on top of that.

That's only two of the expenses you can expect with a car. Now, what if your business wants to buy a company car?

Can you afford all of these extra expenses?

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 Here are all of the extra expenses you must consider before you buy a company car

As I've mentioned, there's more to buying a car than just the initial cost and annual services. Those services might not cover general repairs, so if you need to fix something, it could be a huge extra cost.
Then there's every South Africans' favourite issue: Petrol. If your company has a company car, you constantly have to budget for the fuel too.
You also have to have car insurance. This amount depends on the age and type of car, where you keep it and drive it and who drives it. You could pay anywhere between R500 to R1 800 a month just on insurance.
But there is an alternative if your business can't afford all these extra car expenses.
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Consider a travel allowance if your company can't afford the expense of a company car

With a travel allowance, you simply give your employee extra money to cover his travel expenses.
The benefit of a travel allowance is that your employee uses his own car and all those extra expenses are his to worry about.
So look at what your business can realistically afford before you decide to buy a company car.

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