The fleet of commercial cars and trucks increased from 1.8 million in 2017 to 1.9 million in 2018. Depending on the nature of a business, companies use vehicles to transport goods and people or provide a service such as leasing. Vehicles can help advertise a company’s product and help it grow, transport staff increase efficiency when they are calling on clients, or improve delivery speed to boost sales volume. If you’re thinking of buying a car for your company or home business, study several factors to ensure that you are making the right choice and not compromising your balance sheets.
Consider Affordability
One of the first questions that you must ask yourself is whether the company can afford to buy and maintain a vehicle. If your company is doing well, you will have no problem incorporating a purchase as a business cost.
Don’t forget though that buying a business car entails other costs. You need to include insurance/registration fees, maintenance and repair expenses which for a car driven over 15,000 miles a year will cost on average $8,469 according to the 2017 figures of the AAA. On the upside, when you buy a company car, the upfront price of the vehicle plus auto costs and depreciation are tax deductions.
Financing the Vehicle
Another crucial factor is to find ways to finance a vehicle purchase. When buying a new car, you can either pay for it upfront or consider a loan. Even if your cash flow is good, it might be interesting to consider financing since new car rates are currently low. Interest on a company car loan is also a deductible tax expense.
In addition, there are plenty of deals, incentives, and rebates offered by dealerships. For example, Edmunds offers a list of new car incentives and rebates which can be cash discounts, $500 or more, off the prices of cars, low APR financing from 0 to 5%, and lease specials depending on the make and model you’re eyeing.
Type of Vehicle
Once financing is sorted out, define the type of vehicle that would you’re your requirements. If you need to haul goods and people from one place to another, then you will need a spacious car or maybe, even a truck or a van.
Look at the fuel economy of a vehicle especially if you’re going to do lots of journeys. Use online mpg calculators that could save your company a fortune. Moreover, consider the resale value of the car in case you need to trade it in for a newer model or dispose of it altogether. Some models of Toyota, Honda, Chevrolet, Ford, and Porsche have high resale value.
The decision to buy a new vehicle for the business depends on several factors including affordability, financing, and the type of car that would best meet your needs. Without looking at these considerations, you might just be incurring an unnecessary and unjustified expense for your company.
