For some small businesses, buying or leasing a vehicle is a necessity more than a luxury. This is especially true for businesses that offer delivery and service-based companies that make visits to clients’ properties. However, like buying a personal vehicle, buying a car for your business is a significant financial decision. So, what are the things that you should consider first before heading to the dealership?
First things first, can your business afford a car? Keep in mind that it’s not only the car itself that you’re paying for but also the maintenance, fuel, insurance, driver wages (if you’re hiring a driver), and replacement parts such as Subaru timing belt kits. Can your business’ financial status support these expenses on top of the ones you already have?
If the answer is ‘yes,’ then, by all means, buy a car for your business. But if you’re tilting on your answer, it might not be the right time to buy a car. If this is the case, what you can do for now is to improve your cash flow, put more money aside, and find other means of transporting your goods or services for now.
So you’ve decided that your business’ finances can handle the expenses that come with buying a vehicle. The next thing you should ask yourself is: how am I going to pay for it? If you’re buying a car in cash, there’s no problem there. Otherwise, you’re going to have to find a good financing option to purchase the vehicle.
You can finance a car either by direct lending or dealership financing. For the former option, you can take out a loan from the bank, a private lender, or a credit union, much like when getting a small business loan or housing loan. On the other hand, dealership financing involves signing a contract with the dealer, which will then be sold to a bank, credit union, or financing company to collect payment from you.
Decide on a financing option that works best for your business, particularly your finances. A good practice is to shop around for financing deals, talking to multiple dealers, and scouring for the best deal on a business car.
One of the most important factors to consider when buying a car for your business is its size. To determine the size you need, think about what you’re mainly going to use it for after buying it. For example, if you’re going to use the car as a delivery vehicle for relatively small to medium-sized items, then a sedan might be enough to meet your needs. But if you’re going to be lugging around multiple personnel and large equipment, choose a bigger vehicle with enough space to accommodate the things (or people) you need to transport.
It’s impractical to buy a business car that is flashy yet expensive, but you don’t want to end up with a pile of junk metal either. Imagine what your customer will think if you show up with their delivery in a beat-up sedan. Not the best first impression, as you can expect.
When buying a vehicle for your business, you’d want one that is presentable: not flashy or expensive-looking but not ugly either. And if possible, you might want to buy a car that is on par with the ones that your competitors are using so that you don’t get left behind.
Another important factor to consider is parking. If your business has a parking lot, you’d have no problem with this. But if you don’t, you have to consider where you’ll be parking your car and how much that will cost you. Parking fees can add up, especially if your business is situated in a busy area, so ensure that you get an accurate estimate of this cost before buying a car.
Furthermore, consider if the parking space available to you is safe. The last thing you want is for your business vehicle to get vandalized or stolen while it’s in the parking lot. If you’re on the fence about the safety of the parking space you’re eyeing, don’t hesitate to find another option near your business premises.
There are many benefits to buying a car for your business, such as tax advantages, improved operations, business growth, among many others. However, buying or leasing a car holds a certain level of financial risk, and you must be ready for the responsibility before you sign on any dotted line.
If you’re thinking of buying a business car, consider these factors first before anything else. Once you’ve determined that you are indeed ready to buy a car, start shopping around for great deals and loans on the market.