One piece of advice often given to aspiring business owners is to keep personal and business finances separate.
By doing this, entrepreneurs lay a good foundation for managing money the right way so that if something unexpected happens, their assets and credit are protected.
Now, if you already know this and have opened a separate small business bank account, that’s great. Remember also to apply for a DUNS number, set up utility accounts in your company name, and, of course, establish your business credit. Another thing to consider is buying a commercial vehicle–whether it’s a work truck, car for client meetings, or fleet for deliveries.
That being said, let’s get into the steps of buying a commercial motor vehicle.
Understand What Makes a Vehicle “Commercial”
The first step of buying a commercial vehicle is considering your needs and how your country classifies vehicles used for business purposes. In the US, as long as the vehicle’s registration shows that a company owns its title, it’s considered “commercial.”
CMVs or commercial motor vehicles include vans, buses, pickup trucks, taxicabs, travel trailers, etc. These could transport goods or passengers. For those that will carry heavy cargo, drivers need to obtain a different type of license.
If you’re still unsure about vehicle classifications, you can check out this informative guide on what is a commercial vehicle?
Check Local Dealers
You’re looking for one that has commercial vehicle sales experience. If you’re not sure where to start looking, though, it’s best to get recommendations from fellow business owners.
You can also get referrals from small business organizations in your area. Once you have a list, be sure to check reviews online. Don’t just rely on testimonials found on dealers’ websites.
It helps to have an idea about a dealership’s inventory, facilities, customer service, and so on before you drop by to visit. If you can, try to go on a weekday, so there are fewer shoppers. You can also schedule your visit at the end of the month or the quarter since there could be a salesperson who needs to reach their numbers, meaning you’re likely to get a better deal specializes in shipping commercial vehicles.
Consider a Commercial Vehicle Group for Fleet Purchases
That means instead of checking out local dealerships one by one, you can opt to go directly to the manufacturer.
Of course, this would only be advisable if your operations require a fleet. Keep in mind that manufacturers have a different set of requirements than dealerships. For example, some would check if you already have a specific number of cars in your fleet before they can sell you more of their vehicles.
If fleet purchasing is out of your budget, you may also look into leasing. It may help to consult a tax expert to help you decide on which leasing agreement offers the best financial benefits for your company.
Think About How to Finance Your Purchase
You want to save money, so paying cash is the way to go. Right?
While paying cash ensures you will pay the lowest possible cost for your commercial vehicle, don’t forget that business equipment, trucks, etc. depreciate fast. You might regret paying cash for a new truck or van when you could have used it to grow your business in other ways (e.g., hiring more people).
That’s why you should find a financing option that’s a win-win for you and the dealer. Remember, dealers earn when buyers enter loan agreements. They can sweeten the deal for you by giving you a break on the vehicle’s price, especially if you can pay it off asap.
Just don’t forget to check if there’s an early payment penalty. You should also have enough cash to pay off the balance in a few payments.
Get Commercial Vehicle Insurance
No matter what type of commercial vehicle you buy, it needs proper coverage.
One reason for this has to do with taxes. You see, premiums for business car insurance are tax-deductible. Yes, that applies even to self-employed individuals whose cars are used only for business.
Another reason you need commercial vehicle insurance is that the liability coverage limits are higher. If you have employees who drive the company car, a personal insurance policy might not be enough to cover the costs if they get involved in an accident.
Crunch the Numbers and See if You’re Better off Buying a Used Vehicle
New vehicles are fantastic, but they also have price tags that could be out of your budget.
Meanwhile, used trucks and vans are affordable, and there’s a wide assortment of them available online or through a dealership. The only downside to buying online is you can’t inspect the vehicles personally, but your savings could be considerable (as long as you do your research).
If you’re okay with purchasing your commercial vehicle online, be sure to review state and federal requirements. Also, remember to double-check the TCO or total cost of ownership. Sure, you could save some money on an inexpensive used truck, but if you’re going to pay more for maintenance and repairs, then the ownership costs aren’t worth it.
Be Sure About the Warranties
Old or new, you need to know what warranties are offered before buying a commercial vehicle.
If the car you’re considering is older than five years, check if the manufacturer offers an extended warranty. Otherwise, make sure it’s newer than five years old. The vehicle’s age is essential because typical warranties are only good for a set amount of years.
Other things to consider for a commercial vehicle warranty include mileage, frequency of use, parts, and who will drive the car/van/truck.
Ready to Go Shopping?
Now that you know the steps involved when buying a commercial vehicle, do you think you’ll be heading to a local dealership soon?
If you still need more tips and advice, there are tons of online resources that can help. You may also check our other articles for related information.
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