21 Dec Factors To Consider When Buying A Vehicle For Your Business
Depending on the type of business you run, purchasing a company vehicle is necessary and could provide immense benefits to your business operations. It could save you time, improve productivity, reduce the burden on delivering products to your clients, and you can even enjoy some attractive tax benefits from owning a business vehicle. However, like any other major business-related purchase, buying a company car is a substantial financial investment.
Get it right, and your business will reap the benefits it offers. But get your purchase wrong, and you’ll probably be left with a significant mountain of debt, expenses, and regret. So, do you feel the time is right to get a vehicle for your business? Do you want to make a purchase that brings value to your business? Then you should consider the following factors before you make your purchase.
- What type of business car do you want and why?
The first thing you need to decide on is what type of company car you need and why. For example, are you looking for a refrigerated van for sale for your food business? Do you need a minivan to kickstart a doorstep delivery service? Does your business need a truck to convey raw materials from their production sites to your business premises? Or do you need a simple saloon car to offer easy staff commuting solutions?
Answering questions like those above will help you determine why your business needs a vehicle and what type of car you need.
- Decide whether you want to buy or lease your business vehicle
The second thing you might want to do is decide which option makes more business and financial sense – buying or leasing your company car? Both options have a set of pros and cons you need to consider.
For example, buying your company vehicle could be the more expensive option, but you’ll have less to deal with repairs and maintenance issues. You may also need a loan or some other form of financial assistance if you don’t already have the funds to pay upfront. You might also need an initial down payment, bearing in mind how much you might be spending on interests. Remember that you don’t need to spend excessive amounts on vehicles that are new too. Try looking into second hand commercial vehicles as a potential option for your business.
Opting to lease the vehicle can help with your business cash flow. It can also prevent you from spending on a depreciating vehicle, and some options may even come with business-related discounts. Depending on your business location, you might even be able to reclaim some expenses through tax.
It is important to conduct thorough research about the pros and cons of both options concerning your business before you make any decision.
- Bigger cars, bigger bills
It sounds pretty obvious that the larger your company vehicle, the more you can expect to spend on it in terms of price, maintenance costs, fuel, repairs, and so on. So, while you know what type of vehicle your business needs, you should also think about what expenses you cannot afford and find ways to make the necessary compromises. For example, instead of purchasing a sedan, why not consider spending on a hatchback instead? They are more fuel-efficient, ideal for small parking spaces, and perfect for any bustling city business.
- Car model
It also makes sense to consider the vehicle model you want. Different car models offer different strengths and weaknesses, and you need to identify which strengths will work for your business. For example, if you expect to cover long distances with your vehicle, you might want a model that offers fuel efficiency and durability. Also, some vehicle models are more suited to some terrains than others, and you’ll have to factor that into your purchase.
- Affordability
The company car you purchase must be affordable within your business budget. That means not only do you need to have a budget for it; you should also ensure that you don’t go a penny beyond your budget. Buying a company vehicle that falls outside your business budget means you may be harming your business’s finances, which can quickly send you spiralling into debt.
While it is always possible to pay off your company vehicle with a loan or other form of financial assistance, you should also make sure that the monthly amortisations fit comfortably within your business budget. You don’t necessarily have to go for a brand new or expensive vehicle. There are loads of affordable options that will do just fine, leading to another important point.
- Consider buying a used car
If you’re considering purchasing a used vehicle for your business, you’ll find that the benefits are quite similar to buying a used car for personal use, and you can save some money with this option. However, the risk level goes up a notch here, as making the wrong choice can do your business more harm than good. So, it is important to have the vehicle thoroughly inspected by a trusted and reputable mechanic to rule out any major issues with the vehicle.
- Consider your ideal preference
Another thing worth considering is the vehicle specifications ideal for your business. Today, there are so many vehicle models offering such a wide range of specs that it can be confusing to choose the right one for the first time. But with a little bit of research, you should be able to determine which specs are ideal for you. For example, do you prefer four-wheel drive? What kind of technology does the car have, how will it benefit your business, and how does it impact the cost of the vehicle?
- Available financing options
If you don’t have enough to cover the full cost of the car, then you should find out what financing options are available for you. This is crucial, as signing up for an unfavourable loan business car loan can set your business up in the direction of debt for up to about five years. When looking for a creditor, focus on ones that offer better financing terms with the least interest. That means taking the time to shop around for the right options before choosing the best option.