Mobility Blog

Why a salary packaged corporate car lease policy is a business imperative

Why a salary packaged corporate car lease policy is a business imperative

A corporate car lease policy that enables employees with a salary linked company car, brings the organisation numerous immediate and long-term benefits. Salary packaged cars provided by employers are usually tax-efficient for employees and unburden them from considerations like a large down payment or even the worries of vehicle maintenance. This frees up productive time and energy towards business activities, and employees are happier to have a vehicle while saving a significant sum. An enterprise can partner with ALD Automotive, to devise and roll out a well-rounded car lease policy.

What is a salary linked corporate car leasing policy?

Car leasing is a preferred vehicle ownership model where an employee can opt for a car and have monthly lease rental directly paid from their pre-tax salary by their employer. For this, the enterprise will first need to tie up with the car leasing company, undergoing an onboarding process which involves a credit check, after which the company would need to draft and roll out a company car lease policy for its employees. 

Once a corporate car policy has been rolled out within your organization, your employees can check if they are eligible for a leased car, then select the most suitable vehicle using the innovative My ALD Quote tool, and finally enter into a contract. Once the signed documents have been rapidly processed, the selected vehicle is ordered, personalised, and delivered to the employee. The employee enjoys the use of the vehicle for a fixed period (usually between three to five years). 

How do employees benefit from a corporate car lease policy? 

  • Tax-efficient salary structuring: Car leasing provides employees with a lower net monthly EMI as they only pay for the depreciation value, and not the entire cost of the car. As the lease amount is deducted from the pre-tax salary, the employee stands to save up to 30% in taxes. As opposed to a car loan that comes with hefty down payments, leasing delivers a pocket-friendly option. 

  • Simplified usership: Directly owning a vehicle brings along associated responsibilities. Right from dealing with financial institutions (in case of loans), to procurement management, recurring insurance, maintenance charges and accident repairs; the worries are myriad. A salary linked corporate car lease disconnects the worries of car ownership.
    ALD Automotive ensures that vehicle maintenance is organised according to a pre-determined schedule, often providing a replacement temporary relief car if required at an additional cost. There are no hidden or surprise maintenance costs as all financial aspects are included in the monthly lease rental. Insurance is taken care of by ALD, right from policy selection to claim settlement and follow-ups for repair. 
    At the end of the lease tenure, the employee may select to purchase the vehicle at the market rate, return the vehicle or even opt for a fresh lease with a new vehicle. The burdens of having to dispose of a used car are done away with. 

  • Full vehicle funding: One of the greatest benefits besides the incredible tax savings, is the total funding of the vehicle. The employee does not need to put any amount upfront, making vehicle usership much easier. The monthly lease rental is reduced from the employee’s pre-tax income and paid directly by their company to ALD. With a company lease policy, employees can dive right into selecting a vehicle of their choice and eligibility, without worrying about having to first save a down payment amount. 

How does the corporate benefit by rolling out a corporate car lease policy?

  • Liquidity: The enterprise also greatly benefits from not having to invest funds into vehicle assets, which are depreciating. Since employees can procure leased cars as per their eligibility through a simplified process, there is little or no need for the organization to directly procure or maintain company cars. Having a corporate car lease policy in place can thus increase financial liquidity for the organization, allowing funds to be diverted to revenue-generating activities.

  • Organisational productivity: A vast amount of time and energy may be expended by employees during the normal course of a day if they’re using public transportation to commute to and from work, especially when they have to commute for meetings or on-site assignments.
    Availing of a vehicle through the corporate car lease policy can increase the efficiency of an individual employee by saving on the time and effort required to navigate public transport. Having access to a vehicle may also bring down overall stress levels, thereby ensuring an employee can better focus on work. Extrapolating these aspects across the organization can have a multiplier effect, boosting the overall productivity of the entire organization.

  • Employee safety: Having a vehicle to commute provides enhanced physical security to employees. The cocoon that a vehicle provides during commutes, can shelter an employee from the weather, unnecessary jostling often prevalent in public transport, hygiene and mitigate against the spread of unwanted contagions. This in turn further protects other employees and lowers the need for health insurance claims.

  • Employee morale: Having a company lease car may actually boost employee morale, by providing a sense of accomplishment and self-pride. These in turn may enhance self-confidence which is vital for every agile organization. Employees may also be motivated to stay with an organization longer because of the quality of work-life that vehicle usership provides. A corporate car lease policy is imperative when this is considered.

While there are other softer benefits associated with having salary linked car leasing plans, the key elements covered above, point to a core requirement for your enterprise to roll out a corporate car lease policy. Enquire with ALD Automotive to find out how your business can initiate pre-sanction processing and on rolling out an effective car lease policy across your enterprise, or see these FAQs.