Do you require a van, truck, or company car? The correct car can reduce operating expenses for your company and save money on shipping, delivery, and rental fees. Nonetheless, given the high cost of cars, choosing the right one to buy is essential.
We’ll go over seven suggestions for purchasing a business car, discuss the advantages of company cars, and offer cautions about what can happen if you purchase the incorrect car.
Tips for buying a business car
Keep in mind these seven best practises when purchasing a vehicle for your company.
1. Choose your business vehicle’s size carefully.
Aesthetics are fine, and deciding on a sports car could be a fun way for your company to show off its ambition. But will it really come in handy when you have to deliver a trunk full of sample goods to a client two towns over at 2:30 on a Wednesday?
Think about all the frequent trips your company’s car will take, and estimate how much room you’ll need. A sedan would be the most sensible option. Maybe a van is what you’ll need to get everything done. Here, a brief period of reflection is very beneficial.
2. Consider crucial business vehicle add-ons.
Think about whether any optional extras are absolutely necessary for you when purchasing a car for your company. Enhancements have the potential to increase vehicle safety, which is equally important as workplace safety, as well as provide useful advantages and limit depreciation.
For example, GPS fleet management solutions are crucial if your company vehicles must travel farther. However, if your business is small and only plans to use one vehicle to serve a restricted clientele, satellite navigation could be an unnecessary burden on your dashboard, draining your batteries.
If you frequently transport clients, staff members, or vendors in your business vehicle, you should think about getting passenger airbags. While not necessary, aesthetic upgrades like metallic paint and alloy wheels help prevent depreciation and give your company a sense of prestige when the company car is being driven.
3. Don’t underestimate the competition’s company cars.
While it’s generally a good idea to let your work speak for itself, what happens if your competitors drive more modern, stylish cars than you?
It takes a tightrope act to maintain your company’s competitiveness while showcasing the prestige of your brand while on the go. If you drive an expensive, big-engine car every three days, you’ll waste money and reduce your cash flow. But you don’t want to appear less competent than the opposition.
Make sure the car you choose will enable you to compete in a market full of competitors, but resist the temptation to buy a fuel-guzzling vehicle just because it seems like a good idea.
4. Consider aesthetics when purchasing a business car.
A business vehicle symbolises your company. It might come from an unexpected place. If it’s visually appealing and persuasive, you might even get new leads for sales.
You don’t want something that fits in with the crowd if you’re particular about your company’s vehicle representing your brand. Having a car that draws attention—whether it’s elegant or just slightly unique—ensures that people will notice your company.
5. Stay true to your purpose and review your vehicle options properly.
Remain dedicated to the intended use of your business vehicle throughout the purchasing process.
You will probably come across many alluring offers and deals for cars that aren’t what you intended to buy when you’re browsing the market for a vehicle that fits your goals and aspirations. It’s critical to ascertain whether any car you’re thinking about can handle the demands placed on it.
Invest in a car that can handle the task, whether it’s for door-to-door marketing, frequent liaison trips, or the daily commute between offices.
6. Prioritize fuel economy when buying a business car.
The last thing you want to do when you add a car to your fleet is shell out huge sums of money for regular refuelling.
If it’s a sports car or an executive-class car, you might be able to justify using a fancy car for personal transportation. Still, it’s hard to justify a 5.0 engine for moving your CPA from one office to another.
Use online miles per gallon calculators to monitor the fuel efficiency of the car you have selected. As an alternative, think about an electric or hybrid car.
7. Get your business car insurance right.
Getting the appropriate commercial vehicle insurance is essential. Generally speaking, standard business insurance policies don’t offer the kind of coverage you might need if you drive your car for work.
You might be tempted to cut corners on your coverage when you take into account the difference in costs between standard auto insurance and commercial auto liability insurance. But the risk of having your policy invalidated is too great to avoid having enough coverage.
Generally, there are three types of business auto insurance, each with a different price range:
- Use of business by you
- For business purposes, all drivers
- Travel regulations for businesses
It is best to investigate these levels of coverage and select the one that best suits your needs and those of your business.
Benefits of buying a company car
Purchasing a company vehicle can have a big impact on your company and provide the following advantages:
1. Buying a company car brings tax advantages.
The tax benefits are a big incentive to buy a company car. A lot of entrepreneurs are aware that certain insurance premiums are tax deductible. Nevertheless, they are unaware that if the vehicle is utilised solely for business, they can write off car insurance premiums and other costs in addition to the deductible.
Before filing your annual taxes, you should determine the best strategy to claim your company car, advises tax software provider Intuit. Either the actual cost of the car or the mileage can be deducted. Compute the business car’s expenses and mileage, then provide your accountant with the results.
2. Buying a company car can protect your personal insurance rate.
The fact that a company car has no bearing on your individual auto insurance policies is an added benefit. In the event of an accident, your personal auto insurance rates remain unaffected.
3. Buying a company car can help you control your corporate image.
Your company’s reputation may suffer if a salesperson shows up at a prospect’s place and drives them to lunch in a clunker. You can strike the ideal mix between success and conservatism when you own the cars that your workers drive for work.
If your business doesn’t cater to the very wealthy or sells luxury or premium goods, an extravagant company car may give the impression that your rates are too high. Conversely, an overly inexpensive car could indicate that your business is having trouble and is therefore dangerous to work with.
4. A company car lets you spread brand awareness.
Information such as your brand name, logo, domain name, tagline, contact details, and graphics can be displayed on your company vehicle, van, or truck. Your car will carry information about your business, what you do, and how to get in touch with you wherever it goes. The majority of workers would find it unacceptable to have this kind of branding on their own cars.
5. A company car can help you attract talent.
Including a company car as a desirable employee benefit in the hiring process can be a good idea, especially if the position requires driving. Consider a salesman who has to travel a certain distance to meet with clients. If your company allows them to use a company car, they will probably choose to sign with you over a rival job offer that requires them to use a personal vehicle.
6. Buying a company car lets you specialize vehicle features.
Features that you or your coworkers might not find in a private vehicle can be found in a company car. If you own a roofing business, for instance, you would require a truck that can store ladders and a towing hitch for a trailer containing supplies and tar. If your business delivers things, having a van big enough to hold boxes would be helpful.
If you own a fleet of cars, you can use one of the top fleet management services to make sure your drivers and their belongings are always secure and in the proper location.
What can go wrong when buying a car for your business
You can purchase a company car with the best of intentions, but things can go wrong. Here are a few of the most common errors that can be made when purchasing a car for your company, along with advice on how to avoid them.
1. You buy a business car that’s unsuitable for your needs.
The car will become useless and a continuing expense if you didn’t give your purchase enough thought and ended up with a too-small or unfit car.
Here’s how to steer clear of this error:
- Recognise your needs. Make sure you comprehend exactly who will use the car, how often it will be used, and how your company plans to use it. For instance, cosy seats are essential if your group will be taking lengthy car rides.
- Test-drive automobiles. Take a test drive in various cars to learn how they handle and acquaint yourself with their features, especially the safety ones.
2. You buy a company car you can’t afford.
Oversized or overly equipped vehicles will cost more up front and each month, as well as more for fuel and insurance.
Here’s how to steer clear of this error:
- Recognise what you are purchasing. Examine car reviews from other entrepreneurs to find potential benefits and drawbacks.
- Establish insurance premiums. Make a preview rate inquiry with your insurance provider by giving them a call.
- Examine the fuel economy. Before making a purchase, carefully consider each vehicle’s fuel efficiency and compare it to those of similar models.
3. You buy a business vehicle that needs many repairs.
Purchasing a lemon or a car that needs constant maintenance can be very expensive.
Here’s how to steer clear of this error:
- Do some research on the model you are buying. Examine reviews of various models before purchasing a new car to identify those with recurring mechanical problems.
- Make sure a secondhand car isn’t a lemon. It is even more important for used cars to lower the likelihood of frequent breakdowns. In order to receive your money back if the car turns out to be a lemon, have it inspected before making a purchase or before the grace period on your current vehicle expires.
4. You pay too much for your business vehicle.
Getting the best deal is sensible because cars are significant capital investments. Overspending depletes the funds in your company and disrupts your cash flow.
Here’s how to steer clear of this error:
- Compare the deals. After selecting a model, obtain quotes from several vendors and evaluate their deals. Inform them that you’re thinking about other offers to see if they can improve the terms.
- Haggle over the cost. Since car prices usually include a fair amount of profit, haggling may help you get a better deal. For an extra discount, you might offer to pay cash for the car instead of financing it after receiving the initial price. Do some preliminary research on rates if you plan to finance the vehicle. Obtain preapproval and present it to the dealership as another justification for your price reduction.
