You need vehicles for business utilize. But you might consider buying or leasing one through your company rather than as an individual. Basically, this just means your business is officially named as the owner or lessee of the vehicle.
Overall, the process of buying or leasing a vehicle through your business appears fairly similar to buying or leasing a vehicle as an individual. But you still need to find a merchant. And select a model that works for your specific needs and secure financing. However, look for some variances when buying.
How to Lease a Car Through Your Business
Take a look at what the process looks like.
Work With a Dealer That Offers Commercial Service
Different manufacturers offer different programs and nomenclatures for this. But basically you need to find a dealership officially authorized to work with commercial clients. Ford calls this type of dealership a Commercial Vehicle Center. Consider Village Ford in Dearborn, Mich. for example.
Village Ford General Manager Bob Wheat was indicated in a phone interview with Small Business Trends, “As a CVC dealer, we have access to different programs than other dealers, we can offer commercial financing and it’s just a much easier process.”
This doesn’t inevitably entail the dealership only works with commercial vehicles. Village Ford offers options for both individuals and businesses. But they hire a dedicated commercial salesman and a few other team members specifically authorized to work with commercial customers.
Consider Customized Solutions
The type of vehicle or vehicles that you choose can vary widely depending on your specific needs. If you’re just looking for a simple passenger vehicle, then this part of the process may be fairly similar to buying or leasing a automobile for personal utilize. You could simple find an in-stock option and then work with the dealer to fine-tune the details.
However, for businesses that need fleet vehicles, heavy obligation alternatives or cars with very specific features, you might instead work with a merchant to create a customized answer. To do this, you’ll first need to have a very clear notion of what your needs are. You may also have better luck get the ideal vehicle if you give yourself some time to shop around and work with a merchant on customization options, rather than desperately searching for something that you can drive off the lot in a single day.
Wheat also emphasized the importance of working with a dealer that really understands the needs of commercial customers. They can help to ensure that your vehicle selection is set up to handle your specific hauling wants, size requirements and budgetary concerns.
Choice Between Buying and Leasing
Businesses have the option of either buying or leasing certain commercial vehicles. When you buy, you often build slightly higher pays. But they go toward paying off private vehicles. So once you’ve paid it off, you own private vehicles outright and it becomes an asset for your business. When you lease, you don’t ever actually own the vehicle. You simply make payments through a period, usually of about three years. Then you turn the car in at the end of that period or have the option to purchase it. The pays are often a bit lower for rentals, but there are also mileage and accessibility considerations to make.
One option isn’t automatically better than the other, according to Wheat. You simply have to evaluate your business’s situation and what your exact vehicle needs are to determine which one is a better fit.
He says, “If you merely want a vehicle for about three years and you don’t want to take cash out of your business to set a lot of money down, then you should probably think about leasing. It reserves money and doesn’t tie up your credit line. You’re basically opting for schemed obsolescence in return for a new vehicle. But if you’re looking for a vehicle that’s highly specialized for your business and “youre supposed to” drive it until the wheels fall off, those people should think about buying.”
Bring Your Business’s Financial Documents
You should have a transcript of your latest balance sheet and any other fiscal documents that can help you demonstrate your credit worthiness. You’ll need to establish a relationship with a lending institution. So they’ll want to look at your business’s cash flow, revenue, indebtedness and any other components that could impact your ability to re-pay your auto loan or attain lease payments on time.
Be Prepared to Guarantee the Loan Personally
If your business does not have enough credit to qualify for a loan or rental payment plan that fits your needs, you may need to guarantee the loan on a personal level. You would still be allowed to buy or lease the vehicle or vehicles through your business officially. But you would also be personally responsible if you’re not able to make the payments.
Work with your dealership’s finance department to come up with the terms that work best for you. This may not be ideal for some business owners. But particularly for new or unestablished business, it’s often your only option and may help you start to build some fiscal history that could help you going forward.
This article, “5 Easy Steps to Lease a Car Through Your Small Business” was first published on Small Business Trends
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