Almost every other small and medium business needs a vehicle at some point of time. Let it be a company car, a delivery van or a pickup truck, when it comes to make a purchase, you want to know whether you are getting it right or not.
As a fact of the matter, major business decisions like buying a vehicle should be based on numbers and not on impulses. So, before you actually buy a vehicle for your business, you must ensure that your purchase is wise, strategic and will contribute to improve the profitability of the business.
This article will discuss 4 hassle free steps for buying a vehicle for your business.
1- Know and Understand the Need of Vehicle:
The first question you should ask yourself is, “why is your business purchasing this asset”. Remember that any vehicle purchased for a business is a long-term asset, and being a startup or a small business, you are more likely to purchase a vehicle with a long-term liability (a loan). So, it is very important to buy it with a profitable purpose. Do some basic math and know how much money this purchase can make.
2- Explore the Options that Meet Your Requirements:
If you need a car for short trips to save day to day expenses, a small, used compact car should be ideal. However, if your business needs to carry a lot of products, tools and equipment then you must look for a van. Whatever the vehicle you intend to purchase, you can save a lot of money by eliminating unnecessary features that cost more. This article discusses the pros and cons of cars and trucks very well.
3- Buying New vs Used:
Join Our Small Business Community
Get the latest news, resources and tips to help you and your small business succeed.
With a purpose of purchase and the required vehicle in mind, the next step is to look at the options that fit well in your budget. You may buy a new or a used one and each options has some advantages as well as disadvantages. A new vehicle means better reliability and newer features but it comes with a higher prices. On the other hand, used vehicles have lower initial cost, cheap insurance premiums but uncertain reliability. Here you can find a detailed article on new vs used car purchase.
Whether you should go for a new vehicle or a used one depends entirely on the primary use of the vehicle and for how long you plan to use it. In case, if you are buying a car that you can use for additional profits, i.e. by becoming an Uber or Lyft driver, you must know that they have specific requirements for vehicles and your car must pass the inspection. Read more here How to Pass the 19-Point Vehicle Inspection.
4- Securing Finance & Making Purchase:
Being a small business owner, you are more likely to purchase vehicle for your business on a long-term liability, i.e. a loan, however, here three important considerations to make sure that you choose the right financing type;
- If your business is in stable condition and you have a handsome amount of working capital in the bank, go for a direct purchase. Check out for promotions and deal around, and it’s always good to avoid a long term liability.
- If you do not happen to find a goof deal when you need it, better lease a vehicle with a smaller upfront payment and smaller monthly payments.
- Look for a vehicle that can save you some tax, but do not focus on saving tax entirely.
- Duly check online auto insurance quotes, but also get in touch with local companies for the best insurance deals. Do check this quick auto insurance guide for startups.
The Bottom Line:
Buying a vehicle can give your business a huge boost by cutting a lot of expenses as well as increasing revenues, but to make it a profitable concern, you must buy the right vehicle for right price and with the right financing option. It is always a good idea to consult an expert before making any such purchases; their expert opinion will surely help your business.