Having one or more reliable cars available can be essential for businesses that require deliveries, transportation services or any other type of on-the-road activity.
However, buying a car for business use isn’t just a matter of picking one off the shelf and paying the price. There are considerations to think about before you make a purchase, as seen in this Hive Business Blog, so let’s evaluate some of the key points to remember:
1. Consider Purchasing Or Leasing
Purchasing a car outright can be expensive and could tie up capital better spent on other aspects of your business. Buying gives you full ownership of the vehicle and is usually best for businesses that require cars for long periods of time and can afford to do so.
Alternatively, you could opt for leasing agreements that let you rent the car for a fixed monthly fee for an agreed period. This tends to be cheaper in the long run and allows regular replacement of vehicles with minimal hassle.
2. Choose A Vehicle With Low Running Costs
Business cars should be economical to run in order to keep your fuel costs down and make the most of your budget. Look for cars with low emissions so you can benefit from reduced road tax, or alternatively, an electric or hybrid car could be a good option.
Regular servicing and maintenance are inevitable costs. Things to check before you buy include how much the car is likely to depreciate and whether it has any specialised requirements in terms of servicing.
3. Decide On A Vehicle Category
You should choose a type of vehicle that meets the needs of your business. Is it for transporting goods or people? Do you need something that can tow a trailer? Does it require 4×4 capabilities?
Consider the size of the vehicle, as bigger cars are more expensive and guzzle more fuel. Look at what your competitors are driving and decide on a category that suits you best.
Most businesses will require over one vehicle, and it’s a good idea to choose something that offers uniformity across the fleet. This allows you to purchase in bulk and benefit from discounts, as well as making it easier with servicing and maintenance.
4. Think About The Extras
Factor in any extras you might want in a car. These can range from air conditioning to satellite navigation systems and tailored interior styling. Many of these will add value and help make your life easier, but always remember that more extras mean a higher purchase price.
For a business, additional features like built-in hands-free telephone systems and parking sensors can be very useful. You’ll also need to think about any modifications or adaptations, like extra seating or cargo.
5. Assess Safety Features
Safety should always be a priority for business cars, so you’ll need to look for vehicles with good crash test ratings and modern safety features such as airbags and anti-lock braking systems.
In addition, any extra safety features like reversing cameras or blind spot warning systems can help with driving efficiency.
You can read reviews and safety ratings from Euro NCAP, which provide an overall assessment of the vehicle’s safety.
6. Insurance Costs Requirements
Business car insurance differs slightly from standard vehicle cover. In general, it should be more comprehensive and include features like breakdown and legal cover, as well as the option to insure any goods that are being transported.
Avoid opting for the cheapest insurance you can find as this might not offer the level of protection you need. Speak to your broker or look online for quotes and read policy documents carefully before deciding.
7. Investigate Tax Implications
Cars with emissions of more than 130g/km attract a tax on vehicles that are used for business purposes.
There are many factors to consider with taxation, including the fuel type and CO2 emissions; you can use HMRC’s online tool to get an estimate of how much your car will cost in terms of the carbon tax.
For company cars, you may also be liable for benefit-in-kind tax; speak to an accountant or financial advisor to get further information on this.
8. Set A Budget And Stick To It
Before you shop, it’s a good idea to set a realistic budget. This will help you stay focused on your goal and make sure you don’t overspend.
Consider all the costs associated with running, taxing and insuring the car and also factor in any maintenance or repair expenses you may need to cover.
Don’t just go for the first car you see – do your research and compare different models, prices and deals that are available on the market. If you are looking at used cars, make sure you check the service history and get a report for any major mechanical issues.
Having a business car can be a great addition to your fleet and give you an edge over the competition. Remember cars depreciate over time; think carefully about how long you want to keep the car and whether it’s worth investing extra money in features that could add value.
Always remember to compare different models, explore all financing options and consider extras carefully before deciding.