Steps To Buy A Car Under Your Business’s Name
If you started your own business and have been using your own vehicle for company errands you may be finding that it is no longer adequate to deliver goods, travel long distances or perhaps even transport staff. On top of that, you could be losing out on the tax benefits of owning a company vehicle versus using your personal one. When it comes to buying a vehicle under your business, we’ve taken the guesswork out of the process for you.
Step 1: Work Out Your Budget
The first step is to decide how much your business can afford and what you are willing to spend. Once you have a budget you can start looking for a vehicle that meets your needs within that allocation. Don’t forget to consider if your company can afford a deposit on that vehicle, which will help reduce monthly repayments. Use a finance calculator from your bank or lender to figure out how much you will spend on the car and if it’s really a good time to do so. Make sure you also factor in what commercial insurance will cost!
Step 2: Check Your Credit Rating
Did you know that lenders will look at both your personal and business credit rating to ascertain your risk profile? Check that all is in order before you apply. If your score is low, you could contact the credit bureau to clear up any issues lenders might find before you actually apply.
Step 3: Decide on Buying or Leasing
With vehicle finance you can buy or lease, depending on affordability. If you are planning on buying a vehicle you are given the option to either buy from a supplier or private sale.
Buying a vehicle involves obtaining a loan to finance the full purchase price of the car. This can be used in conjunction with deposits to reduce the borrowed amount, as well as balloon payments. When you have paid the loan in full, ownership of the vehicle is transferred from the financier to your business.
A vehicle lease, on the other hand, means you pay for use of a vehicle for a set period of time, and at the end of this period, the vehicle is returned to the dealership or financier. Once the vehicle has been returned you can choose to initiate a new lease for a new vehicle.
Step 4: Choose The Right Size Vehicle
If you are needing to transport staff or move heavy equipment then you will need a car that is fitting for the tasks you will need it for. Consult a salesperson to find out what kind of vehicle would be the best to meet your needs. Group1 has a wide variety of used cars that could be just what you are looking for within your budget.
Step 5: Get Your Documents Together
You need to check business vehicle finance requirements with your bank or the lender. If you have all your documents in order before you apply it will save a lot of time and speed up the process.
Some of the documents you need would be:
- Details of what you’re planning on financing
- A business plan detailing how the vehicle will help your business grow
- Your company’s registration and VAT number
- Banking details and the business’s balance sheet
- Registered address and the business contact details
- Details of owners, e.g director, trustee, and members
Step 6: Negotiate The Contract
Get your lender to structure your loan in a way that is affordable for you, including the type of interest rate that you want as well as whether or not you want to pay a deposit or a balloon payment. A fixed interest rate is higher than a linked interest rate but it will not fluctuate during the period of the loan. A linked interest rate will change according to the reserve bank interest rates.
Group1 can help you find a car that is suitable for your business needs and is also within your budget. Shop online and browse our range of affordable cars using the car tool on our website.
