Purchasing a company car is necessary for any business, but it can be an expensive investment. According to cost estimates by BankBazaar, car prices in India range from Rs. 3.39 lakh for a Maruti Suzuki Alto to Rs. 4.17 crore for a Land Rover Range Rover. It’s worth understanding that the buying price isn’t the only cost you need to consider.
The total cost of owning a car revolves around things like repairs, routine maintenance, fuel, and insurance. This doesn’t mean renting or hiring a vehicle for your business is better than buying. Instead, invest time to learn how to choose your first car for your business to optimize its value. Below are the top considerations when choosing the right business vehicle.
Leasing vs. Buying
As a business owner, you should spend some time weighing the pros and cons of leasing and buying a company vehicle. Reviewing the alternatives for owning business cars is vital to ensure you’re embracing the most efficient scheme. For example, purchasing a car outright is the most expensive option. However, you don’t need to worry about mileage limitations linked to finance deals.
Leasing is an excellent option for proper cash flow management. When you lease a company car, you enjoy a transparent view of the total life cost of the vehicle. You also don’t have to worry about regular maintenance, as it’s included in the contract, thus freeing up administration cash and time. Remember, your options for buying a business car will depend on cash flow and tax benefits. Therefore, take time to review your business goals and research the pros and cons of each option.
When choosing a business vehicle, your organization will need to choose between petrol or diesel fueled cars. Your decision will depend on the distance your sales or delivery team will travel regularly. For example, if your team travels or commutes long distances every day, a diesel-fueled vehicle guarantees fuel efficiency and better performance. Petrol vehicles are suitable for short-distance trips at lower speeds.
Alternatively, you can choose electric vehicles and spend less on fuel and maintenance, and reduce your company’s carbon footprint. With the availability of different electric vehicles and charging options, you need to research the market carefully. Doing so helps you determine if mild hybrid, plug-in hybrid, hybrid, or battery-electric vehicles are fit for your business. Research also helps you choose the best fast electric car charging system so you can charge your fleet faster and at affordable rates.
Before you purchase a business vehicle, evaluate your company’s finances and create a budget. Budgeting for a business vehicle ensures you choose a model that’s within your budget. Typically, overspending on a company vehicle may hurt your cash flow and your business could end up in debt. Remember, it’s possible to take an auto loan for a company vehicle if you’re short on cash. Nonetheless, budget for monthly car loan repayments that fit your budget.
Buying a company vehicle can increase productivity, save time and money, and boost employee engagement. However, a business car is a costly investment, whether it’s for deliveries or transporting the sales team to meeting destinations. To ensure you get a high return on investment from your company fleet, you must choose wisely. When choosing a company car, decide if leasing or buying outright is ideal. Also, think of fuel options and create a realistic budget.