Car allowance vs Salary

[techmoan]

So I currently have a job earning 37k.

Been for new interview and asked them to match it. They have offered 34k + 3k car allowance.

Will I be worse off, the same or better off?

Anything I need to be aware of?

[Gareth1974]

A higher basic salary tends to be better - your pension is often linked to this, so car allowance wouldn't count toward it.

[devnull]

Yep, car allowance is unpensionable income, so in theory your current job pays more towards your pension (assuming you are contributing).

[Bullett]

Car allowance may also conditions attached, such as 4/5 door only, no sports cars, not more than 3//4/5 years old.

[edc]

Also when you get a salary increase it will be on the basic salary typically. Any other benefit or employment related calculation will also be based on your basic salary. Mortgage affordability, loan application etc can all be impacted.

[techmoan]

% for pension etc doesn't really bother me. The main one would be mortgage affordability. I'm going through an application at the moment based on my current role and they did ask if I get any allowances such as car payments which I currently don't.

The main cause for concern is if this would then cause issues with mortgage application.

The role is much better for me though so in a difficult position. I can't really negotiate more as this is now their top offer after going back a few times.

[techmoan]

Just looking at HSBC mortgage affordability online and it states annual income and mentions to INCLUDE any guaranteed extra income such as car allowances.

I take it some include these and some do not?

[Bullett]

It's never made a difference to me.
I think the critical point is making sure it's contractual (you get it every month, it's part of the deal) vs the company being able to take it away or not pay it if they feel like it. Like a bonus.

[Sheepshanks]

techmoan said:

Anything I need to be aware of?

Is it really just extra pay to spend as you like or does it have to be used to pay for a car?

[techmoan]

Bullett said:

It's never made a difference to me.
I think the critical point is making sure it's contractual (you get it every month, it's part of the deal) vs the company being able to take it away or not pay it if they feel like it. Like a bonus.

Brill thanks. Just read the contract and it's a permanent payment paid monthly. No terms on what car you must have.

[fat80b]

techmoan said:

% for pension etc doesn't really bother me.

Staggering - It should do - you should at least know what it is worth to you as otherwise how can you compare a vs b.

If the pension contribution %age of the current place is high and the new one low, you could use this to negotiate a different basic amount.

Bob

p.s. Not being bothered is frankly being stupid

[techmoan]

Sheepshanks said:

Is it really just extra pay to spend as you like or does it have to be used to pay for a car?

Nope doesn't need to be spent on a car. Just extra cash per month.

[techmoan]

fat80b said:

Staggering - It should do - you should at least know what it is worth to you as otherwise how can you compare a vs b.

If the pension contribution %age of the current place is high and the new one low, you could use this to negotiate a different basic amount.

Bob

p.s. Not being bothered is frankly being stupid

A 3k per year difference in basic will not make a massive difference to pension contributions in my opinion.

[AyBee]

Match it with a job change? You must really want the job if you only want them to match it - most people move jobs for a salary increase...

[techmoan]

AyBee said:

Match it with a job change? You must really want the job if you only want them to match it - most people move jobs for a salary increase...

Indeed my current role is really really really boring! I want to move more for the working environment rather than the salary increase.

[fat80b]

techmoan said:

A 3k per year difference in basic will not make a massive difference to pension contributions in my opinion.

It will if the first contributes 10% and the second contributes the govt minimum......

[mcbook]

To me this indicates that the company is already trying to cut costs on your employment. Why won't they just match you £37k? They are make a saving by offering a car allowance that they will be able to change on a at the drop of a hat when it suits them.

As a previous poster has commented, it will be non-pensionable so instead of a matching 10% contribution being worth £3,700 per annum it's now only worth £3,400.

I'd be less worried about the pounds and pence and more concerned about the underlying message: "we are tight and you're never getting a pay rise".

[techmoan]

mcbook said:

I'd be less worried about the pounds and pence and more concerned about the underlying message: "we are tight and you're never getting a pay rise".

Like I said I'm not really fussed about the £300 a year missing out in pension payments. To me £300 a year less more than makes up for leaving this god awful boring place. It's more about the job and working environment forcing the move. I can't see my current place giving me a pay rise any time soon either!

I will take it all on board though and think things over over night rather than rush into anything.

[Sheepshanks]

mcbook said:

To me this indicates that the company is already trying to cut costs on your employment. Why won't they just match you £37k? They are make a saving by offering a car allowance that they will be able to change on a at the drop of a hat when it suits them.

I'd certainly be worried along those lines too - too easy to withdraw the car allowance if it's non-essential to the job.

Also it strikes me that they must think £37K is OTT for the job so that's going to limit the scope going forwards - you won't get pay increases because you're already above where they think the pay should be.

[mcbook]

techmoan said:

It's more about the job and working environment forcing the move. I can't see my current place giving me a pay rise any time soon either!

Very valid point. if you want out and the current job is crap you should probably make a move. However, I'd be inclined to push for a better offer or continue to look for other roles... if you can stick the current place for a bit longer.