How to Buy a Car for Your Business
Buying a business car is one of the best ways to make your commercial venture grow. After all, what good is a product or service if you can’t deliver it to your customers?
Whether you plan to use your business car to take you to your clients or transport goods, the money you invest for a car purchase can secure the future of your business, and therefore requires your serious consideration. Below are the key points to consider to carefully determine the right vehicle for the type of business that you own.
## The questions to ask
Before buying your first business vehicle, you need to answer these questions:
1. How do you intend to pay for the business car?
2. Should you finance or lease your business car?
3. Should you choose a car or a van?
4. Do you need your business car to be brand new, or will a used business car suffice?
5. Will the car be used more for personal than business purposes?
To help you find the best answers to these questions, each point is elaborated upon below.
## Affording a business car
If it is indeed the right time to buy a car for your business, you need to decide the best payment method for it. Of course, the best way to pay for the car is to buy it outright, as this means you’ll only be paying for what’s on the price tag, exempt of extra fees and charges. In addition, you’ll have more power to negotiate large discounts if you can buy the car with cash.
## Finance or lease?
On the other hand, if you’re like most companies that don’t have enough money on hand for the purchase, then you may need to choose one of two options: leasing a business car or financing it. With car finance, you will own the car when payments end.
With vehicle leasing, you give the car back at the end of the period. The best car lease deals typically cost less than financing, but the mileage you’re allowed to use can be limiting, especially if you need to use the car more frequently. That said, each method has its own pros and cons, and it’s important to identify which advantages can serve your growth and financial goals better.
## Business car or business van?
Does your business use up a lot of miles each year? Do you plan to expand your business in the near future? Will you be using the vehicle to transport large volumes of goods? In all of these cases, you may need to buy a larger vehicle, such as a van. Choosing the right size of vehicle is about considering your coverage area and the goal to operate at maximum efficiency in terms of function, mileage, and capacity.
By choosing the most efficient vehicle type for your needs, the benefits and savings to your business will be considerable. If you’re having trouble choosing which vehicle size is right for you, you may want to take a look at what similar businesses are using.
## New or used?
If budget is a primary issue, you may want to consider buying a used business vehicle instead of a new one. Vehicles depreciate, and the difference between the price of a new car and an old one can possibly be directed toward other aspects of your business that equally need the funding.
That said, while used cars are a good purchase for some business owners, new cars are a great choice for others, especially those with the money for it. Some of the biggest advantages of buying new include:
- Reliability – you’ll have less potential for problems with a new car, and there’s also the warranty to protect you.
- Interest rate – new cars often have lower interest rates than used cars to make up for their high initial costs, which can be important over longer-term loans
- Resale value – new cars have higher resale value, which can considerably decrease your total ownership costs.
## For personal or business use?
If you’re going to purchase a car for business purposes, you need to ensure that you use it mainly for that purpose. As the old adage goes, never mix business with personal life, and this applies to your business cars as well.
Think for a minute—if you already own a car, does it really make sense to go and lay out money on a new vehicle? Depending on your business and personal situation, it may be more cost-effective for you to convert a vehicle that you already own to business use.
## Shop around
If a business car is indeed a necessity, you’ll need to shop around for the best car financing or car leasing deal before you visit a dealership. Compare loans online at local comparison portals such as ecomparemo.com. You may also use such sites to compare features on the vehicles you’re interested in to see how the fit your needs, then browse for available new or used car models near you through Carmudi.
Once you’ve done your research, you can drop by a dealership armed with all the information you need for a smart purchase. Consider having a knowledgeable car buyer tag along while visiting dealerships to have an independent opinion on any car deal offered to you.
## Calculate operating costs
Estimating and comparing operating costs—more popularly known in the business world as whole-life costs—allows a business owner to identify vehicle costs over time. This helps achieve better business car purchasing decisions. When calculating the whole-life costs of a vehicle, remember to consider the following elements:
- Purchase price
- Recurring costs (registration, insurance, etc.)
- Driver training
## Time your purchase
When sales are lean, car dealerships will slash their sticker prices and offer even more attractive loan terms. Pay attention to when these promos happen, as these provide great opportunities for earning significant savings on a new car.
Keep your eyes and ears open for when a car manufacturer releases a new model. If there’s plenty of the previous year model still left in stock, dealerships will be desperate to unload them.
There are a number of great options if you’re in the process of buying a car for your business, so consider all the information above before moving forward.