Having a vehicle is essential to every small business. For example, a logistics business can’t survive without a truck transporting its goods. It might be more critical in businesses in some industries, such as those mentioned above, but it’s good to have at least one vehicle for your business as a rule of thumb. However, cars can be pretty expensive.
On average, a car can cost a small business about $47,000. That’s a lot of money for a company that’s just starting. And if you’re in an industry where you need a fleet of vehicles, the costs can be astronomical. If you consider that small businesses already require $184,000 to start without accounting for the company vehicle, then your business will require more than $200,000 in cash just to function for one year.
If you want to decrease the amount you have to pay for your company vehicle, consider these options.
Lease a Vehicle
Leasing is renting a vehicle for a set period, usually two to four years. You make monthly payments to the leasing company. The great thing about leasing is that you can return the car or buy it outright once the lease has ended. The main advantage of leasing is that it’s cheaper than buying a vehicle outright.
The average monthly payment for a leased car is $506, while the average monthly payment for a financed car is $521. That might not seem like much, but you would save $2,496 by leasing over four years.
Another advantage of leasing is getting a new car every few years. This is helpful if you need to keep up with the latest technology or trends in your industry. Additionally, you can swap your old vehicle for a new one without accounting for depreciation.
The downside of leasing is that you don’t own the car by the end of the lease, so you’ll have to start a new lease or buy a new vehicle outright. Also, if you go over the mileage limit or damage the car, you will be charged fees by the leasing company.
It’s good to decrease the amount of debt your business has, and one way to do that is by leasing vehicles instead of buying them outright. So consider this option if you want to save money on your car purchase.
Maintain Your Company Car
If you’ve purchased a company car outright, don’t worry, there are still options to ensure you can get your money back from your investment. One of the best options is to maintain it thoroughly. There are many ways to maintain your company car, but one of the best options is through detailing.
Detailing is the process of cleaning and polishing the car until it’s in pristine condition. This can be done by hand or with a machine, but it will take some time and effort.
The advantages of detailing are many. First, it will make your car look amazing for business purposes. It will also protect your vehicle from the elements and wear and tear. Finally, if you want to sell the vehicle in the future, a good detailing job can add some value to it.
However, as stated earlier, detailing your company car can cost you a lot of time and effort if you do it yourself. If you want to avoid that, consider bringing the car to an auto-detail shop instead. This will still cost some money, but it will be worth it in the long run. Plus, the experts know best when it comes to these things.
Choose the Right Car
When purchasing a company car, you must choose the right one. You need to select a car that will be able to do what you need it to do. For example, if you’re in the construction industry, you’ll need a tough truck that can handle heavy loads. In the sales industry, you’ll need a comfortable car for long drives and a large trunk for storing samples.
The wrong car can cost you a lot of money in repairs, so be sure to do your research before purchasing. You can talk to friends or family in similar businesses, read reviews online, or even consult with a mechanic.
Buy a Used Car
If you want to save money, you can buy a used car. Used cars are cheaper than new cars, but they still have a lot to offer. You can get a great deal on a used car if you know where to look.
There are many places to buy used cars, but a dealership is the best place to start. Dealerships typically have a wide selection of used vehicles to choose from, and they usually offer to finance. If you don’t have good credit, you might not be able to get a loan from a bank, but you might be able to get one from a dealership.
Another option is to buy a car from a private seller. You can find private sellers by searching online or through classified ads. When you buy from a private seller, you might be able to negotiate a lower price. However, you won’t have the same protections as you would if you bought from a dealership, so be sure to do your research before making a purchase.
You can also look into government auctions. These are typically held online, and you can find various vehicles to choose from. The downside is that you won’t be able to test drive the car before buying it, so you’ll need to do your research to ensure you’re getting a good deal.
Company vehicles are a necessary asset for many businesses, but they can be expensive. Here we have outlined three ways to save on your company car purchase. Whether you decide to buy a new or used car, maintain it well, or detail it yourself, there are plenty of options to help reduce the cost. So choose the best choice for your needs and budget, and start saving today.