When purchasing a business vehicle, what makes sense for one type of small business might not be right for another. The type of car you ...
When purchasing a business vehicle, what makes sense for one type of small business might not be right for another. The type of car you choose depends greatly on the kind of business you run. For instance, if you need to impress high-end clients, you may need a luxury vehicle, whereas if you need to haul large items, a truck or van may be best.
Leasing is a good option if your business vehicle is in the public eye everyday, such as an outdoor tour company that uses Hummers, or a realtor that escorts buyers to open houses. These vehicles need to be up-to-date and in good condition to make a good impression, so leasing a new vehicle every few years might make sense. But if your business requires a hearty delivery van that can take a licking and keep on ticking, buying may be in your best interest.
Regardless of the type of car and financing options you choose, getting the best price is key. Fortunately, it’s getting easier for entrepreneurs to get price breaks thanks to a growing number of manufacturers that are offering incentives and discounts for small businesses. When shopping for a new vehicle, business owners should research:
1. Which vehicle will work best for your business needs.
2. Financing options.
3. Manufacturer and dealer discounts.
Find the right carFigure out which type of vehicle will be ideal for your business use—a luxury sedan, an all-terrain vehicle, a truck, a van, a compact car, etc. The purchase price is just the first of many things to consider. Mileage per gallon, hauling capacity and maintenance requirements are things that will ultimately help you decide which vehicle will provide efficiency and dependability.
Leasing versus buyingIt’s important to figure out which is best for your needs before you start shopping. Mileage allowances, tax deductions and financing all come in to play in this decision.
IRS deduction tips on the business use of a vehicle. Learn more about the pros and cons of leasing and buying from our guide to fleet management and learn the ins and outs of financing your business vehicles at our guide to fleet financing.
Manufacturer incentives for small businessesManufacturers want to attract small business customers because business customers make up a great deal of their repeat business. To attract businesses, the manufacturers offer discounts, maintenance packages and incentives, such as extra equipment or gift cards. The best way to find the right vehicle for your business and the best deal for your company is to compare the vehicles and the plans of each manufacturer before you start shopping for your next business vehicle. Ask about volume discounts and repeat business discounts and you may be able to project savings on your next vehicle too.
Ford offers a fleet incentive program to businesses that have purchased five or more vehicles in the last year or businesses that have at least 15 vehicles in the fleet. In addition to discounts and incentives, the program also offers fleet maintenance packages.
Chrysler offers cash discounts for vehicles that remain in service for at least 12 months.
Toyota offers fleet discounts for business customers who own at least 10 vehicles.
Most other manufacturers offer some sort of business fleet discount or incentive. Call your local dealer and ask what programs are available.
- Most manufacturers who require that a business have a certain amount of vehicles to qualify as a fleet, don’t require the vehicles that have been previously purchased to be from the same manufacturer. Their quota is more of a qualifier to make sure that a customer is a real and bona fide business rather than an individual who is just trying to get a discount.
- Ask your local dealer what their policy is on test drives. Some may let you borrow the car for a few days to test the waters. But if you can’t find a dealer to turn over the keys, consider renting the same make and model for a week from either a dealer or rental agency. It may save you from a bad decision.
- Leasing can cause headaches for business owners who exceed allowed mileage. Ask your dealer if they offer special mileage allowances for business vehicles. When you are deciding to lease versus buy, you need to figure in how much exceeding the mileage allowance may cost you.
- Car companies are always competing for business, especially in this high-cost fuel age. Make sure that the fleet discount is less than any other current discounts the dealer is offering. Most fleet programs don’t allow multiple discounts to be used, so use the one that best fits your business needs.
- Call your insurance agent and price plans on several different business vehicles to determine which vehicles carry higher premiums. Also take into consideration upfront costs of licensing and sales tax of the vehicle.