Having a company car makes sense when your employees need to travel regularly. It gives you better control over your business’s image and workers’ safety.
You can customise these vehicles to advertise your company and ensure their maintenance eliminates the risk of liability.
The United Kingdom also provides tax credits for businesses that choose to operate company cars, which can make running them less expensive than reimbursing your employees for using their own.
The average price of a car is more than £38,000, so it is essential to know your options to reduce the costs associated with your fleet. Here are five cost-cutting strategies to help you buy your next company car.
Buying Your Next Company Car – 5 Cost-Cutting Strategies
1. Choose the Right Vehicle
Spending money on vehicles your company will get the most out of is essential. Selecting the right car can take some research, but it is more than worth it.
Narrow down the models you are most interested in after assessing your needs. The more an employee can use the vehicle for business, the more cost you will recoup from its purchase.
Two significant points of consideration are fuel efficiency and resale value. You want a car with the best fuel economy to meet your needs. Frequent travel will lead to more petrol used. The less you have to pay for gas refills, the better.
You also want to examine each car’s resale value. You likely will not keep the car forever, and knowing what it will sell for can help you make the best long-term investment.
2. Know Your Financial Options
It is essential to know your options when purchasing a company car. While each dealership has different specifications, there are three primary ways to buy your next vehicle.
Outright Purchase
You will buy the car with cash instead of a loan programme. This is the easiest method if your company can afford it. You won’t have to worry about making monthly payments on the vehicle and will have full ownership to sell or modify it right out of the gate.
Contract Hire
Arranging a contract hire means you lease the vehicle for a specific period before returning it to the dealer. There are many benefits to this arrangement. It lowers your monthly payment and lets you choose another car to enjoy after the term expires.
A downside of leasing is that there are rules and regulations about what you can do with the vehicle while it is in your custody.
Financing
Just as you can finance your personal car through the dealership, you can do so with business vehicles. This is an arrangement where you own the car but agree to pay it off in monthly instalments with interest instead of in a bulk sum.
If you cannot pay, your debt increases, and your vehicle becomes eligible for repossession.
3. Use Tax Information to Your Advantage
There are a few tax considerations when purchasing a new company car, including some that will benefit you.
The first thing to know is that whoever has their name on the vehicle will pay a company car tax. Since the vehicle is an advantage for an employer, it falls under benefit in kind (BIK) tax bands.
The government offers an incentive for company cars that produce fewer emissions, such as electric or hybrid versions. A green tax incentive puts environmentally friendly vehicles on lower BIK bands.
Another quality that affects the vehicle’s BIK band is its list price with add-ons but without the first-year registration fee or vehicle tax.
4. Weigh Maintenance and Insurance Costs
Once your company owns the vehicle, you must pay for its maintenance and insurance. These are essential costs to consider when looking for the right deal.
A low-cost car might be inexpensive because it needs work. Constantly paying for maintenance is a hassle you don’t want and could add up to more than you would pay for a better-quality vehicle. One way to improve your odds of having a nice car is to get it MOT tested.
Researching the insurance cost for each vehicle you consider is also essential. Insurers will provide a better rate on a car without a history of issues. Do your research on which companies offer the best prices for each vehicle.
5. Negotiate the Best Price
Purchasing a car is one of the few times a seller expects you to negotiate, so take advantage of the process.
You can get the best price possible by knowing what similar cars go for in the area and working with the dealership to get extra perks for your vehicle.
Knowing the vehicle’s suggested retail price and what other dealerships sell the model for puts you in an advantageous position. Explain to the dealer that you know the data and could seek a car elsewhere unless you get a good deal.
Negotiations do not always involve a car’s price. You could negotiate to pay more than you want by getting dealer perks like free oil changes or new tyres, which will save you money.
Purchasing Your Next Company Car
There are many advantages to purchasing a company car for your business. Knowing these cost-cutting strategies allows you to drive away your ideal vehicle for the best price.
