Expenses People Often Forget When Buying a Vehicle for Business
Whether you’re in financial consulting, real estate, or landscaping, there comes a time when you need a business car. It can be a car dedicated to getting you and your employees to and from work, listing appointments, business meetings, job sites, scheduled services, among other places. Or your business can entirely be centered around your vehicle. For instance, if you run a rental cab business or have food trucks in various locations.
Getting a car exclusively reserved for your transportation and your business operations comes with plenty of perks. Car mileage and gasoline are deductible business expenses for starters, but if an IRS audit is done, you’ll be required to prove that the deduction was due to business function and not for a personal purpose.
Wrapping your business car in vinyl with your company logo is an excellent low-budget marketing strategy for businesses looking to expand their exposure. The advertisement will receive a considerable number of impressions when driving around the city just like a stationary billboard mounted on the side of the road.
What’s more, you’ll appear more professional when pulling up in a sleek business car and chances are high that you’ll strike a deal with a client.
Having said that, there are some expenses that people often forget when purchasing a business vehicle. Most often, their minds are more focused on the many benefits that will come with owning a business car.
In this post, we shall be exploring some of these expenses that you should keep in mind when buying a business vehicle.
Let’s get started:
1. Financing Charges
Unless you’re buying your business vehicle in cash, you’ll have to opt for a loan, which comes with financing charges. Financial charges refer to the amount you’ll be charged for taking out a loan and is based on the interest rate.
Your interest rate is determined by the type of car, your credit score as well as the terms of the loan. You can reduce your financing charges by saving up for a large down payment and shopping around for a friendly rate.
2. Car Insurance Costs
Just because you pay for property insurance, health insurance, homeowner insurance, or even personal car insurance does not mean that you’re protected from any accident. You’ll also need to insure your company car.
While car insurance isn’t mandatory in all states, it is a useful coverage. In case of an accident, you’ll be required to pay hundreds or even thousands of dollars from your account if you don’t have insurance.
Depending on where you buy your business vehicle insurance policy, you might be required to pay between $750 and $3000 per year in premiums.
Be sure to talk to the sales forecast to see if this is something you can afford. Fortunately, you can shop around and do some comparison before buying your commercial vehicle insurance policy. This way, you’ll find the plan that matches your budgets and particular needs.
All cars, whether used or new, are subject to sales tax. The amount of taxes you’ll pay will depend on your location.
Depending on your state, the amount of sales tax you pay will range between 2 and 8 percent. Talk to tax authority representatives or your dealer to find out the amount of tax you’ll pay so you can budget appropriately.
4. Dealership Fees
Sometimes your dealer may require to pay a documentation fee, which is a processing fee to do the paperwork.
Some dealers may even require you to pay a preparation fee to get your car ready and also a delivery fee if you need your car to be delivered from the manufacturer.
5. Registration and Title Fees
The law requires that you register your car under your name before driving it. This means, paying out a certain amount of money for registration, required title documents, and license plates.
The cost of registering a car varies from state to state, so be sure to check with the Motor Vehicles Department in your state.
Even if you buy a brand new car, you should be ready for routine maintenance costs such as oil changes and tire rotations. You should expect to pay more if you buy an older car. An older car will need more repairs, for instance, battery replacements, new tires, and windshield replacements.
7. Fuel Costs
Depending on your gas mileage and how often you drive, expect to pay a considerable amount for fuel costs. The cost of fuel will depend on your car’s miles per gallon and also the gas prices and road conditions in your area.
You should consider buying a car with friendly fuel economy ratings if you drive a long distance to work or frequently drive out of time.