Company Mileage Reimbursement: Is It Worth It?

[Nathan40]

For the last six years, my employer has provided me with a fleet vehicle (a Chevy Equinox) that I've been able to drive for personal use. My wife and I have three kids and have fit three car seats in the back row. We've been a one car family since we had our first kid.

We are expecting our fourth this summer, so we bought a 2022 Honda Odyssey EX-L with 30k miles on it for $36k back in February (can't stuff a carseat in the trunk of the fleet vehicle). At the same time, my employer took my fleet vehicle away as I wasn't driving enough miles each month.

I have a lot of flexibility with how I travel at work when I do. I can drive my personal vehicle and get paid 68.5 cents per mile. I can also rent a car when I want or take the train. For example, I drove 425 miles in March and got reimbursed $291.13.

I'm wondering how good of a deal the reimbursement is based on my vehicle and its mileage. I'm estimating that my gas plus basic maintenance costs are about 20 cents per mile (based on the MMM article 'The True Cost of Commuting), so I'm making 48.5 cents per mile. At that rate, if I drove 75,000 miles, I would make back the $36k I spent on the car.

Given the projected reliability and longevity of the Odyssey along with the assumed investment returns from investing the mileage reimbursement I get, it seems to make sense to drive the car for work purposes as much as possible.

I'm wondering how other Mustachians think about this.

[SunnyDays]

It all depends on what you consider basic maintenance and what kinds of roads you drive.

I used my own vehicle for work for several years before I retired 9 years ago.  Previous to that I was using a fleet car but it was not assigned to me personally, but rather was a pool car.  I was getting 43 cents per kilometre back then (so 68.8 cents per mile).  It was not considered a great rate then and would be even worse now with gas prices so much higher.  I also drove tons of gravel roads and in a cold, snowy climate, which resulted in higher maintenance costs as well as needing winter tires.  I didn’t keep my reimbursements separate from general savings, so can’t speak to the long term compounding/investment results.  With the roller coaster of the stock market lately I wouldn’t assume you’d be further ahead in future.  In your case, there is also the extra time required to get the added maintenance done.

Unless there is some other compelling reason to use your own vehicle, travelling by train might be the better option, especially if you can make good use of that time.  Not to mention the lower environmental impact.

[Taran Wanderer]

I’ve done the math multiple times over 25 years, and it has always worked out greatly in my favor.  I’ve probably had a minimum of 10,000 miles per year for work, with some years over 25,000 miles.  I’ve always driven mid-range European cars with okay but not stellar mileage, and with the added maintenance expense of a European car, but also a long life of 200,000 to 250,000 miles for each car.  For each car, I’ve tracked initial capital cost, insurance, fuel, and maintenance.  Over the long run, I’ve been money ahead on the mileage reimbursement by thousands of dollars a year.

As best as I can tell, the mileage reimbursement amount should just about cover the lifetime average cost of driving a large SUV or half-ton pick-up.  If you drive a mid-size car, you make money.  If you drive a smaller, more fuel efficient car, your operating costs might only be half as much as the reimbursement.  All of my analyses have been based on the way I buy and use cars - buy new or slightly used, maintain fastidiously, and drive them until well past 200,000 miles.  My current car has 130,000 miles and drives like new.  (Almost looks new when I wash it!).  If you lease cars, your economics will pan out slightly worse, but you’ll always have a newish car.

One downside of driving your personal vehicle - if you are in an accident, or if your car is broken into, the costs will mostly likely be your responsibility.  If you’re concerned about this, check your company’s vehicle policy to understand your risk.  I’ve had both happen, and it has still worked out in my favor over the long run.

For economic reasons, i prefer my own car.  For safety reasons, I prefer my car over anything the company would have provided for me.  For convenience reasons, I prefer my own car - no time spent switching vehicles, and it has everything I need in it:  extra clothes, jumper cables, phone charger, sunglasses, maps (yes, I still use maps sometimes), extra napkins, garbage bag, flashlight, jumper cables, breath mints, and extra change.

I’m a big fan of the company mileage reimbursement.

[Paul der Krake]

Yup, it is obviously a good deal, provable by napkin math.

Say you expect a car to last 200k miles. Assume every single mile were reimbursed. That's ~136k. There's absolutely no credible scenario where it costs 136k to drive a Honda Odyssey 200,000 miles with purchase price, all repairs and all fuel accounted for.

Even with a super conservative 20 MPG and let's go crazy, $6/gallon, you'd spend only 60k on fuel. That leaves an entire 76k to spend on the purchase price and all repairs.

[volleyballer]

I drive upwards of 350 reimbursable miles per week for work, usually all in one day trip. The tldr is that yes, it works out, assuming a reasonable vehicle choice. For a paid off car, I take 65 to 70% of the mileage check and sweep that into my hysa, and keep track of the cumulative amount on a spreadsheet. The other 30% goes to cover variable expenses (energy, tires, maintenance, oil change, etc). Eventually you accumulate enough to swap out to a new (to you) vehicle.

I did this with a 2014 Camry for 5 years then used the proceeds to buy a lightly used Tesla model 3 with FSD, because 350 mile drives for work gets old real quick. 🫤