Making a Car Purchase as a Business Asset
The first element of purchasing a car is deciding between whether to own or lease it. Owning the car may require a loan, which will require you to pay it all back even as the vehicle value changes overtime. The alternative choice is to lease the car, in which case you have to consider the long-term value of the car to estimate your costs. There are upfront costs to think about as well, as buying the car outright may require a down payment. A lease, in turn, may only require the first month of payment as a security deposit. Think about depreciation and which vehicles are more likely to hold value than others. By knowing these details, you can make a more informed decision o whether to purchase or lease the car.
2. Used Versus New Vehicles
Choosing a used vehicle for company is a simple cost-saving move so you can have extra financial resources for other projects and investments. There are some risks to consider for used vehicles, including prior accidents and mechanical issues that may have been incurred by previous owners. It is important to have the vehicle inspected by a licensed and trusted mechanic to confirm there are no major problems before the car enters your company garage.
3. Frequency of Car Use
Before purchasing the car, keep in mind the expected amount of driving time and mileage your company will be expected to use. By knowing this, you can estimate the type of insurance coverage that will be needed. A commercial auto insurance policy can be more appropriate when the car is expected to be used by multiple employees. In addition, a commercial policy can be more valuable if the car is expected to have a lot of daily usage. A regular insurance policy may not provide sufficient liability coverage in case any accidents result in injury to employees or other parties.
4. The Characteristics of the Car
Many vehicles come in a variety of sizes and designs. For business purposes, it is important to consider which type of vehicle fits the functions you want your company car to perform. A car expected to travel long distances may need more gas mileage than others. If you are opting for energy-efficient vehicles, then look at programs that may help you earn additional tax savings. For more commercial-based businesses, look at light vehicles and see if these can sufficiently be integrated into your operating processes.
5. Additional Tech Options
Some cars for business can be more valuable when they have additional technical features and benefits. These can include GPS, telematics, Bluetooth, security services, and more. Some cars may have aesthetic features that can help maintain their value over time, which can make a car purchase an investment for the future. Several tech features may be valuable for safety and security reasons as well. For example, apps can help with reducing distracted driving, provide GPS tracking, and calculate mileage for trips. Place a lot of emphasis on how your company plans to use the vehicle and evaluate which types of tech options you may need.
6. Registration Requirements
States can have different vehicle registration requirements, which makes it important to familiarize yourself with the regulations for the area your business is based in, and where you plan to operate the vehicle. Different requirements can be applied depending on characteristics such as the vehicle's weight. In addition, make sure the vehicle is registered within a month of the purchase date. The typical requirements for registration include the car insurance, title, and the driver's license of the primary individuals who will be driving it.
7. Look at Other Costs
A business car will have costs that go beyond just the original purchase price. In addition, if you take out a loan to purchase the car, then look at the amount of interest you will ultimately be paying for it as well. Additional expenses can consist of maintenance, repairs, fuel, and the overall changes in the value of the vehicle over time. Evaluate these costs and determine how much revenue and profit your company will generate using the car as well. By having this information, you can make a more informed decision on choosing a vehicle that fits your business.
A company car is not always a simple purchase as there are many elements and considerations to make. By looking at factors such as cost, vehicle registration, insurance, and type of usage, you can get a better idea of the type of car you need and how you want to integrate it into your company operations. As you plan out your car purchase with your team, Fast Freddy’s Car Wash recommends looking at these factors and integrating them into your decision-making process.