Buying the right vehicle can positively impact your business in a variety of ways, just as buying the wrong one can cause unwanted issues. If you are in the market, now could be the right time to buy a vehicle because car sales have plummeted due to the pandemic, and you can likely secure a lower interest rate than you would have in the past. As you set out to buy an automobile for your business, here are some things to keep in mind.

1. Consider the financial health of your company

The current financial health of your company is certainly a key factor in whether or not you should buy a company vehicle right now. It should also play a role in the type of vehicle you purchase. A low interest rate is a great start, but you don't want to overspend in such an uncertain time.

"If your business is in the red and you’re having a hard time keeping your doors open, buying or leasing a vehicle through your business probably isn’t the best idea," says Christina DeBusk at BusinessingMag.1 "Not only could a purchase of this type keep your liabilities above your assets, but it could also erode your relationship with your staff. This is especially true if they’re struggling to do their jobs because of being forced to use second-rate equipment or if they haven’t received a raise in years, yet they see that you’re driving around in a brand new company-owned car."

2. Get financing approved in advance

A lot of people show up at a dealership ready to buy a car and simply see what type of loan the dealer is able to find them through a third-party bank. If you are a Nevada State Bank client, you are encouraged to come to the bank for financing approval2 in advance. This way, you should be able to negotiate with the dealer to get the best loan terms possible. Click here to get started with the auto loan application* process.

3. Get the right insurance

Once you do make the decision to purchase a company vehicle, it is important to obtain the proper insurance.

As Vladimir Yakimenko at Business.com explains, "Standard policies don't typically carry the level of protection that you may require if you're using your car for work purposes. Considering the disparity between business-level insurance and standard rates, it can be tempting to skimp on your coverage, but the risk of having your policy invalidated is too great to sidestep this."3

Coverage will vary depending on if you are the only one using the vehicle, if others in your company will be using it, or if it is used for commercial travel purposes. Speak with an insurance agent to determine the appropriate policy, and shop around for the best rate.

4. Keep miles per gallon top-of-mind

As you're looking for the right vehicle to purchase, fuel economy should be a top priority because ultimately, this is going to determine how expensive the automobile is to maintain day-to-day and week-to-week, beyond your car payment and insurance costs. Research different makes and models ahead of time so you can be sure to get a vehicle with a solid number of miles per gallon. This is even more important if the vehicle will be traveling long distances.

5. Choose the right size and appropriate options

You should also factor the vehicle's size into your decision. You will generally pay more for larger vehicles, so it's better not to go overboard if you want to save money. Limit any unneeded add-ons to keep the price reasonable. Depending on how you intend to use the vehicle, some options might be worth it. Look at all options available on the vehicle you want, and determine which ones will be helpful and which ones would be unneeded expenses.

6. Keep in mind how the vehicle will represent your business

Finally, consider your brand and how you want to be perceived by clients and customers as you make your choice. Aesthetics may not be important for some business owners, but for others, the look of the vehicle can send a signal that you are successful or less so. Striking the right balance between price and appearance should be the goal.

If your business has been dramatically impacted by the pandemic, it may not be the right time to buy a company vehicle, but if your business is in good health, there may not be a better time. Just be smart about your purchase.

 

*Loans subject to credit approval. Terms and conditions apply. See a banker for details.

 

1.  https://businessingmag.com/5023/strategy/vehicle-through-small-business/

2. Subject to credit approval. Terms and conditions apply. See a banker for details.

3. https://www.business.com/articles/7-lessons-about-buying-a-business-car/

 

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank. Nevada State Bank is a division of Zions Bancorporation, N.A. Member FDIC