Receiving a company car as part of your job offer might seem like an exciting perk, but there’s more to it than just having access to a shiny new vehicle. Before you accept, it’s important to dig into the details so that you can make an informed decision. Below, we’ll walk you through the most important things to know before accepting a company car, helping you avoid surprises and fully understand what you’re signing up for.

Understand the tax implications

One of the first considerations is how a company car will impact your taxes. Vehicle benefits are considered taxable income, which means you’ll have to pay tax on the value of its use. The exact amount can vary based on factors like the car’s value, your location, and how much you use it for personal reasons. Ask the company for a clear explanation of how they report the vehicle benefit to tax authorities and how this will impact your paycheck. Make sure it’s clear whether the tax liability makes this benefit worth it for you financially.

Get clarity on personal use

Not all company cars come with unlimited personal use. Some employers place strict rules on when you can drive the vehicle outside of work purposes. Others may restrict it to commuting and work-related errands only. Before accepting, ask about policies around personal use. If the car doesn’t fit your personal lifestyle needs or comes with strict limitations, consider whether it’s the right benefit for you.

Find out who covers maintenance and repairs

When agreeing to accept a company car, knowing who takes care of maintenance and repairs should be a priority. Some companies manage this entirely, while others may put specific responsibilities on the driver. Understand whether regular services, like oil changes or tire replacements, are covered. Also check whether you’ll be on the hook for repairs related to wear and tear, or if those fall under the company’s responsibilities.

Understand insurance coverage

Insurance is crucial for any car, and company cars are no exception. Don’t assume that you’re fully covered. Businesses often provide commercial car insurance, which might not address the typical personal liabilities that come with driving. Alternatively, they might opt for business car insurance. Research the difference between these types of coverage to better understand what responsibility falls on you. If you’re required to contribute to additional coverage, factor those costs into your decision.

Figure out who pays for fuel

Driving a company car often comes with added expenses, and fuel is a big one. Some businesses fully reimburse fuel costs, while others might place a cap on fuel reimbursement or restrict it to work-related travel. Clarify whether you’ll receive a company fuel card, how the reimbursement process works, and whether you’ll need to cover any portion of it out of pocket for your daily commute or family trips.

Having a company car can be a great benefit, but only if you fully understand the details. These are the most important things to know before accepting a company car. Taking the time to ask the right questions can save you from headaches later and allow you to decide if the benefit fits your lifestyle. If you’re faced with an offer, don’t hesitate to contact the employer directly to get clarity on the fine print.