If you are reading this, then you know how crucial transportation is for your established business. Or perhaps you need a financial breakdown of the cost of handling transportation for a business. Or maybe, as an employee, you want to know the value of a company car.

If you are asking yourself how much a company car is worth, it means you have realized that your company uses transportation frequently or periodically at a high cost.

And as an employee, having a company car will help reduce costs and save unnecessary expenses when compared to a personal vehicle.

But if you don't know how much a company car is worth or the most cost-effective way to get one, then you might end up paying too much unnecessarily. 

Luckily, we have put together this article that contains everything you need to determine how much a company car is worth to an employee and how much one will cost for your company.

How Much Is a Company Car Worth? Why Companies Use Cars

A company car is a vehicle that companies, organizations, or firms own or lease for their employees to use for personal or business purposes. This reduces transportation costs and saves expenses, especially if your company depends on transportation.

Not all companies require a company car, but it is recommended for companies that can afford it unless your business is one that rarely uses transportation.

Factors Affecting the Cost of a Company Car

Leased or Purchased Company Car

If you’ve decided a company car is essential for your business to thrive, you can either buy a fleet of cars or lease/loan them.

There's no specific rule when it comes to the value of a car. It all depends on preferential cost, distance, and usage. However, the list price of an average-sized American car cost around $10k - $17k.

After buying, the responsibility of the fleet of cars falls in your company's care. That means that maintenance and repair costs will be included in the company's budget.

This can be a huge cost consideration for employees coming into your company as it offsets a sizable amount of cost from their income.

Unlike buying, loaning/leasing a company car cuts the cost of maintenance and repair as the leasing agent will cover the cost. 

To get started with a leased car, you have to pay the down payment and monthly payment. The average cost to lease or loan a company car is usually between $400 - $600.

Insured Company Car

After acquiring your fleet of cars, it is recommended you get them insured for protection against physical damage of both the vehicle and passenger, theft, and weather disaster.

How Much Is a Company Car Worth

The insurance policy you choose will cover all those if the policy majorly includes heavy injuries of passengers and brutal damage of vehicles.

If the company car is loaned or leased, there is a good chance you won’t have to pay for insurance since the company car is already insured, but some leasing agents might require you to purchase collision coverage and comprehensive coverage since the leasing agent is the lienholder.

If you purchase GAP insurance, this policy can help pay for the car loan if it is stolen or damaged in an accident, especially if you owe more than the depreciated value of the company vehicle.

To explain further, GAP insurance is very beneficial and is worth the cost when the money you owe on your car is more than the current value of that particular car.

Company Car Tax

This is another cost that has to be incurred when purchasing either a company car or a fleet of company cars. This cost is only incurred if the company car is also used for personal driving. Thus, the tax threshold is low.

To illustrate further, if you get a company car, you get a tax-free working condition fringe benefit, and this is given to you by your business. This only holds if your business is the official owner of the company car. Any personal usage of the car can be treated as a taxable fringe benefit.

In summary, taxable income from using a company car is less unless the vehicle is used much more personally than for your company.

Fuel Cost

Unless you are opting for solar-powered company cars, purchasing fuel is an unavoidable cost for gasoline and electric vehicles. Some companies offer a fuel card you could use to track your employees' fuel usage — this makes it easier to have more control over fuel expenses.

Fuel cards have several benefits, such as discounted fuel and secure fuel purchases by only topping company cars. Plus, there’s no need for fuel receipts as the transaction will be recorded on the fuel card provider database.

Maintenance Costs 

For a company car to work properly, it must be scheduled for monthly or weekly maintenance and repair. The cost of this is very essential. Although the cost can vary from time to time, it all depends on the condition of the company vehicle at that point.

A loaned/leased company vehicle will have less cost on maintenance since the leasing agent will cover most of the cost. Sometimes an owned company car can incur more costs monthly than a leased/loaned company car due to maintenance costs.

How Much Is a Company Car Worth?

This all depends on the cost of purchase/ loans, insurance, tax, fuel, and maintenance costs. The final price will vary depending on which vehicle you choose. 

A good rule of thumb is to add the cost of the car to the mileage cost per year, then add that to the cost of maintenance, repairs and insurance, and any other operating costs.


How much is a company car worth? This question is left for you to answer after you have broken down all the costs associated with a company car.

As an employer, you have to consider either leasing or purchasing the company car, then you must decide the best insurance policy, maintenance, and fuel costs to determine its worth.

As an employee, company car benefits should not be neglected. You have to consider how much it costs to own and operate the same car on your end.

Finally, to ensure you get the best return for your investment, maintenance must be scheduled periodically.

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