Are you thinking of getting a commercial vehicle for your business or company? Wondering about how you can purchase one without getting into too much debt?
Here are a few factors you need to consider when buying a company vehicle:
Do you really need a company vehicle?
Consider your personal and business situation before heading to the nearest dealership. Maybe you have a personal vehicle that you can use while saving up for a commercial vehicle purchase.
By making use of what’s available, you can invest the funds in other aspects of the business. This will also give you time to save up or see what the best business car financing options have on offer.
What is its purpose?
Your answer to this question will determine the type of vehicle you should purchase as well as the features and/or accessories you may need.
Is the company car going to be an extension of your office? Perhaps an SUV with a built-in Bluetooth phone system would be the one you need. This way, you can make calls to staff, clients or suppliers while on the road, from one destination to another.
Do you need a fuel-efficient car that runs on clean fuel? Cars fueled by electricity or compressed natural gas are popular options. However, you will also need to consider where you can refuel your vehicle.
Maybe you need to get stocks from your suppliers or deliver goods to your clients. In such cases, you may need an affordable delivery truck that is fuel efficient.
How often will you use it?
Will you be using the vehicle every day or on certain occasions only?
If you own a construction business and you need a crane for a small residential project, then leasing may be a better option. By leasing, you only pay for the time that you use the vehicle and opt for a trade once there is no longer a need for that equipment.
How much can you afford?
Any type of vehicle, whether it is a car or a truck, new or used, requires investment. Do you have enough funds to purchase the vehicle? Consider your budget, whether you are paying for a new or used car or opting for other financing options.
Make use of other financing options if purchasing the vehicle outright is not possible. You can get a car loan or get commercial hire purchase (CHP) quotes from various lenders, and see which option is better suited for your needs.
With a hire purchase, the financier rents the asset to the buyer for a specific amount of time. During this time, the buyer pays the financier a set amount on a monthly basis. The buyer then gets ownership once the full amount has already been paid.
On the other hand, car loans allow the buyer to own the vehicle right away. The buyer applies for a loan at a bank or a financial institution. Once the application is approved, the bank lends the buyer money to purchase the required vehicle.
In return, the buyer has to pay the bank or financial institution the principal amount plus interest. The interest rate will vary depending on the amount and the duration of repayment.
Think about the monthly payments when it comes to loans and leases. Your business budget should determine how much you can afford to pay. It is important to have more than enough to cover the monthly installments or the principal and interest.
Compare different financial products from various agencies and institutions. Check the terms and conditions carefully to see what charges and fees are involved.
Do you need insurance?
Once you think of buying a vehicle for your business, you will need to treat it as an asset which needs to be protected. This means purchasing insurance as well.
Shop around for companies that offer insurance for commercial vehicles. Compare packages to see which arrangement can give you the most bang for the buck.
By asking these questions, you are more likely to find the right vehicle for your company, and not end up with buyer’s remorse.
Rob Chaloner is the Founder and Managing Director of Stratton, and is passionate about smarter ways to buy and finance cars. With Stratton, he’s working to help Australian buyers disrupt the traditional car buying, financing and insurance markets through smarter products and online services.