Many businesses decide to get company car for a number of reasons – to take our new and potential clients, to arrive in style at the next business convention, or simply to have a vehicle conveniently on-hand for emergencies. Financing the vehicle, however, can seem pretty daunting, especially for a small business. However, what you may not know is that it’s actually easier and more straightforward than you may have previously thought. Here is what you need to know and think about when it comes to financing a company vehicle.
- Car or van? The first thing you need to do is think about whether you need a car or a van, as there will be advantages and disadvantages to either depending on what industry your business is in. Vans often have the least tax bearings, and you will find that they tend to be cheaper, which is surprising considering their larger size, fuel consumption, and generally higher mileage. While they have more room, they aren’t generally as stylish as a smaller vehicle. Examine the reasons why you’re getting a company vehicle and determine which would suit these needs best.
- Lease, own, or rent? Both forms tend to allow monthly payments, and it all depends on your personal preferences as well as company policy. Leasing means that you won’t necessarily own the car at the end of the contracted time period, and if you want to a bulk payment will need to be made. Alternatively, you can get a new car and start a new plan for a set period of time. There is also the option to rent a Porsche, or another brand of car, as rentals can be a good option for those who need flashy company cars but can’t afford to purchase one.
- Watch the APR. When you’re financing your company car, make sure you watch the APR. Interest can be a real killer when it comes to the cost of your monthly repayments, and it can end up putting thousands onto the overall price of your car. You should also make sure that the interest rate you are being quoted is the APR so that you know exactly what you are paying.
- Keep an eye on the price for tax and VAT. When it comes to cars, there are a couple of basic rules to follow: leasing favors VAT treatment and buying favors tax treatment. The main issue with this is that you need to keep an eye on the price if you decide to buy. Cars for over £12,000 favor the tax treatment, but if they start to go over £17,000, then the tax disadvantages begin to outweigh any possible VAT benefits.
- Owned by you or the company? Finally, you need to know if the vehicle will be owned by you or the company. If you own it, you have the security of knowing that you will always have a vehicle regardless of what happens to your position at work, whereas if the company owns it, it can be taken away if you leave or are fired. However, having it owned by the company can take some of the financial pressure off and may also pave the way for better insurance and accompanying benefits.
Hopefully this has helped you to better understand the world of vehicle financing, and you have learned more about what you need to do before you can go ahead with it. There are loads of options out there, but with the right amount of research and planning, you will find the best and most affordable deal for you and your business.
