If your business is such that a company car is essential, or if you spend most of your working time on the road, the purchase of a company car might make a lot of sense. However, once you have decided that the purchase of a company vehicle is in your business’s best interests, you have a lot of things to consider before you make your move. You’ll find some important points to think about here as you make your decisions.
1. How Will Having a Company Car Affect Your Taxes?
You’ll want to look into how the purchase of a company car will affect your business’s taxes. Once you’ve analyzed the numbers you might decide, based on your research, that you’ll continue to use your personal vehicle in your business. In that case, you’ll want to be fully informed about the tax deductions you’ll be able to claim for those times when you use your personal vehicle for company business.
2. Buying or Leasing? Which Is Better?
If you decide a company car is right for your business, you’ll need to choose between buying or leasing that vehicle. There are pros and cons for each choice. Therefore, you’ll need to take a close look before you decide what’s right for your business.
3. Check Your Credit Report
You might not have the funds to purchase a vehicle outright with cash. In that case, you’ll stand a better chance of coming away with a great deal on a car if you arrange for financing before you ever set foot in an auto dealership.
The very first thing you’ll need to do then, is to check your credit score. If you find any mistakes in your credit report, fix them before proceeding to lenders. You’re going to want to qualify for the lowest possible interest rate. This will allow you to save money in the long run. A pristine credit report will help you to do that.
4. Shop Lenders for the Best Rate
You might want to start your search for a good loan with the financial institution where you already do most of your business banking. Because you have established a relationship with that institution and they most likely want to keep your business, they may well offer you a better deal with them than you can get anywhere else.
But don’t stop there. You owe it to your business to shop around at credit unions and other financial institutions as well. You can also simplify your search for a good loan by checking out online lending services. These sites will obtain quotes for you from a host of lenders. You can then review your options and choose the lender that’s right for you.
5. Look at the Total Cost of the Loan
Of course you want a low monthly payment so as to ease any cash flow issues. However, it’s also important to consider the total cost of the loan. Generally speaking, the longer the term of the loan, the more expensive that loan will be. And this is true even if you’ve negotiated a low interest rate.
For instance, on a 36-month loan for a $15,000 vehicle at 2% interest, your monthly payment would be $430. What’s more, you would end up paying $15,467 over the life of the loan. That same loan would cost you an additional $308 if you were to extend it for 60 months. However, the monthly payment would drop to $263. You’ll need to decide for yourself which option is best for your business.
6. What About Dealer Financing?
If you feel you just can’t spare the time for all of this shopping around and your credit is really good, you might do well with dealer financing. Remember, though, that those low, low rates you see advertised on TV are not available for everyone. All the same, though, dealer financing can be really convenient. Moreover, it might enable you to complete the purchase of a car in a single afternoon.
7. What If You Need a Fleet of Cars?
If the nature of your business is such that you need an entire fleet of cars, you might be able to arrange to purchase those vehicles directly from the manufacturer. In this way, you could get a better deal than you would get elsewhere.
Additionally, if you’re financing a car make sure that car is safe. Check out Enigma Telematics Fleet Management, as they can help you do this.
As you can see, when it comes to supplying your business with a company car, your choices are not always simple ones. But if you approach the purchase of a company car thoughtfully and systematically, you’re bound to come out ahead.