Getting a company car is not as simple as making a purchase and then driving away. You have several decisions to make, such as what insurance to use and what model you should choose. Not to mention all the other considerations, like registering the car and potential additional payments. Before you go ahead with the purchase, there are some things you need to know so that you make the best decisions and make the most of the vehicle itself.
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Why Get a Company Car?
There are multiple reasons a company or employee might decide to get a company car. They include:
- Tax Benefits: Companies can save significantly on the tax deductions that come from owning a company car. It is one of the biggest motivators for purchasing them.
- Improves Company Branding: Company-owned vehicles can significantly improve the brand’s reputation, boosting its legitimacy.
- Employee Perks: Most employees see a company car as a benefit to their career. Rather than having to spend money and use their own vehicle, they are provided with one by the company.
So, now you know why company cars are a good investment, here are the things you need to know before getting one.
It would be best if you thought about what insurance the company car will need, and that requires understanding what it will be used for. If it is solely used for business matters, you might just need to get commercial auto insurance. If you want to also use it personally, though, you might need to get personal auto insurance. It’s important to factor in insurance rates when deciding how the car itself will be used.
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It’s not just the cost of the vehicle you have to consider, although that is a significant cost, depending on the model you choose. You also have to think about additional payments, such as insurance, liability, and accidents.
If an employee gets into a road accident, significant repairs might be necessary. If the car is part of a road accident where it’s the driver’s fault, you could end up paying for liability. These are all payments you need to consider when budgeting for a company car.
Driving a company car requires an extra responsibility – tracking mileage. While this isn’t usually too much of an issue, it is something to remember before getting one.
Buying is Generally Cheaper than Leasing
Instead of purchasing a company car, you might be tempted to lease one instead. It makes sense – instead of paying for an entire vehicle, you can choose to lease one and pay monthly instead. That isn’t always the cheaper option, though. In fact, long-term, it’s often cheaper to buy rather than lease.
Unless you plan on getting a company car for only a short-term duration, consider buying instead of leasing. You’ll save money that way.
The Car Itself
A lot of thought needs to go into the model you choose for the company car. No two models are the same, and some provide benefits that others don’t. Before selecting a model, consider:
- The Size: What is the purpose of the car? If items or extra people need transporting, you might consider getting a larger car. If it is only going to be used by a single person to go to and from work, though, you can probably get away with a smaller model. Consider the distance the vehicle will travel when choosing the size, too.
- The Appearance: When it comes to a company car, appearance is everything. You might find a model that’s extremely efficient but not so pleasant on the eye. Would you want it to represent your company? Keep your brand in mind when choosing the company car.
- Maintenance Costs: Maintenance costs vary from model to model. Some might need more fuel, whereas others might require more trips to the mechanic. Take all maintenance costs into consideration before buying a particular model.
- Eco-friendliness: Most companies want to be eco-friendly, as it’s better for both the environment and their brand’s rep. That’s why it’s essential to take eco-friendliness into account when choosing a model. The most environmentally friendly are electric, but you can also opt for a hybrid car, which uses both gasoline and electricity to fuel the vehicle.
You Can Use an Already Owned Vehicle
If you want to slash costs, you might consider that you can use an already owned vehicle as a company car. It means you don’t have to purchase a brand-new vehicle – you can register the model as a company car.
If you don’t have a vehicle to use as a company car, but you still want to spend less, there is the option of purchasing second-hand. You can find an excellent deal that way.
Consider Who You Buy From
Where you buy from is crucial. Certain car manufacturers don’t allow you to purchase an individual company car – they expect you to get multiple. That might be fine if you want to buy several company cars, but not so much if you only want one or a handful.
It is generally best to buy from a car dealership with plenty of prior experience selling company vehicles, as they will know how to help you choose the right one.
Registering the Car
Registering the car is crucial, and it is doing so that turns a vehicle into a fully registered company car. Make sure you have all relevant documents present, as it will make the process much smoother. Usually, your car dealer will help you organize all of these, and you can do the paperwork the day you buy.
Company cars provide benefits to both businesses and employees. They help save money on taxes, produce better company branding, and provide employees with a genuinely sought-after perk. By knowing what to expect, you make sure that you make the right decisions when getting a company car.