Purchasing a company car is one of the best ways to capture tax benefits, make a good impression on clients and ensure you have a reliable mode of transportation for work. Regardless of whether you choose to purchase a new or used car for your company, there are a few steps you should keep in mind to make a smooth purchase and transition from an old vehicle.
Do Your Research
First, you need to determine what type of vehicle your company requires. Do you need a work van? Perhaps you might search for a full-size truck with towing capabilities? Or, do you just need good gas mileage and a car that will make your clients feel comfortable? Your day-to-day work activities will answer this question for you.
Next, start researching top-rated models in your price range and determine what you may be able to afford to pay for a used versus a new vehicle. Whether you decide to purchase a used car from a private party or a new one from the dealer, make sure you also conduct a VIN check online to make sure the car has a clean history.
Financing A Business Car
If you don’t have the cash to purchase your business car, you need to talk to your bank about financing options. There are typically different terms available for a new versus a used car. Length of the loan, amount of down payment and even rate can vary among these loans. Also, don’t forget to budget for full-coverage on your financed vehicles. The bank will require you to carry it in case of any damage. Full-coverage is often more affordable for a new car versus used as well.
As a business owner, you’ll also want to consult with your tax professional about the best way to go about obtaining your new company car. They can advise you about whether leasing or financing will provide you with the biggest tax break, and how to go about documenting the purchase for tax purposes. Many businesses are searching for ways to lower their tax bills, and they often do it with the purchase of new company vehicles. You may be able to write off the entire purchase price or write off lease payments for the time you have the vehicle.
Find Dealerships With Commercial Sale Departments
Some dealerships with commercial sale departments will offer special financing options to businesses, especially if they are purchasing more than one vehicle at a time. They can walk you through the entire process, and even help you finance it under your business instead of your personal credit. These dealers are also able to help you choose the appropriate type of vehicle for the business you are involved in.
Choose An Appropriate Vehicle
Once you have narrowed your search to a specific type of vehicle that is in your price range, schedule test drives of several different models in that category. You may find that one model or make suits you better, or you simply prefer the options with one model over another.
It’s also a good idea to research and consider gas mileage. With today’s gas prices continually rising, you will need to consider this regular cost when choosing a vehicle for purchase. Also, consider maintenance costs – some makes and models will be significantly more expensive to upkeep and repair as time goes on, simply because they are foreign or harder to find mechanics to work on them.
Using these points of consideration, choosing the best company car for your business can be a smooth and even enjoyable experience. In addition, when it comes time to purchase the next company car, you’ll already know how to go about the process for the best cost analysis and tax outcome for your business in the end.
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