Two of the focuses of my blog are Financial Literacy/Money and Business/Entrepreneurship. An important company cost to figure out is the company vehicle. Cost has to be factored in, in addition to practicality. The following contributed post is entitled, How To Find The Perfect Company Vehicle.
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Whether you just have a couple of company cars for the directors of your business, or you have an entire fleet of cars and vans that are used by a range of employees, there is a lot that you need to consider when it comes to buying, owning, and managing your company vehicles.
The decisions that are associated with the vehicles will start when it comes to working out which vehicle you would like, and whether you would prefer to buy or lease it.
Whether To Buy Or Lease The Vehicle
Vehicles are expensive to buy and there are a lot of associated costs in terms of running. You will need to decide whether the cost of owning a vehicle is really worth it, or if it may be a better option to look at a lease hire option.
When you buy a company vehicle, the advantages are that it becomes a financial asset. The problem with vehicles as an asset is that they very rapidly diminish in value. The amount that you pay for the vehicle new, will be so much lower after just a few months of ownership. If you were to sell the vehicle on after a year or two, you would not get a good return on your investment.
On the other hand, leasing will mean that you and your company will be able to use the vehicle as and when you need it, and after a set period of time, it will return to the company you took the lease out with.
With a lease vehicle, you would be required to maintain a certain standard to the vehicle, and there may be limitations on the milage that you can do. Any deviation on these points could mean that you have to pay out at the end of the agreement.
Buying New Or Used
If you did decide to go down the route of buying your vehicle, you have the choice of buying new or used. There are definite pros and cons to both options.
As previously discussed, a new car does not hold its value. However, you will get the benefit of the manufacturer’s warranty which may mean a reduction in repair costs should anything go wrong with the vehicle during the warranty period.
Used vehicles can often be much cheaper, with the biggest percentage decrease coming from the first year on the road, buying something that is only a year old will be much cheaper than buying the same model brand new off the dealer’s lot.
Of course, if anything goes wrong with your used car, you won’t have the manufacturer’s warranty to fall back upon and you will have to manage any costs incurred in maintenance yourself.
Selecting Your Vehicle
When choosing the vehicle, work out what you want from it before you decide on the make and model. If you are going to be driving long distances, then you will want an engine that is built to last. How many people will need to ride in it? If it will be used for carrying things, think about the size. If you’re buying a van, decide whether it is important to have a tail lift. You may not currently use pallets to load your vehicles, but if you are likely to do this in the future, having the ability to raise a pallet truck to the level of the van is going to be vital. Fuel efficiency and environmental impact should always be a factor in your decision making, but you may also want to throw in insurance costs, and availability and cost of spare parts. Some vehicles have very cheap generic parts available, while others can be a lot more proprietary.
If you are buying a used vehicle, have it thoroughly inspected and do your due diligence to check that it has never been written off following a major crash. Try and find out about any work that has ever been carried out on the vehicle and ask to see the service history. This will give you an indication of any potential problems that may emerge in the future so that you can factor repairs.
Getting Your Vehicle To Your Business
There are of course practicalities to contend with when buying your vehicle. Getting the car or van from the dealer’s lot can prove to be tough. The vehicle may be coming quite a distance, and it may be that you are unable to go and get it yourself. Or, it may not currently be road legal yet. Whatever the reason, you will no doubt want to look for reliable and cost-effective car delivery options.
Before you buy your vehicle, you will need to factor how much it will cost to insure it. You will need to get a comprehensive level of cover to ensure that you do not have to pay for any repairs in the instance of a crash where your driver was at fault.
The next thing to decide will be who can drive the vehicle. If it is for a certain person, for example like a company car that a member of your team working in the field will drive, then this is fairly straightforward. You may want to have a pool car, which can be used by anyone with permission, or you may be looking for a delivery vehicle which may be assigned to multiple drivers. Being clear about the way in which the vehicle is used will help to determine how much it will cost to insure it.
There are a great many decisions surrounding the purchase or lease of a company vehicle, and it is important that you weigh everything up to work out what is right for you. The way that the vehicle is used, and whether you wish to view it as a company asset will be vital. Make sure you do your due diligence into the specific vehicle you are buying to make sure that it is the most cost-effective option available.