Buying vehicles for business may not be as simple as it seems. Kellie Byrnes from MYOB shares some important things to be aware of when buying fleet vehicles. ~ WizeOwl
If you’ve been drumming up lots of business lately and feel like it’s time to expand, it might be time to buy a fleet vehicle to increase your business’ mobility.
While it would be great to be able to just head out to a lot and pick out a ute, buying a fleet vehicle is a bit different than buying a car for personal use.
Read on for some tips you can follow when considering getting a second, third, or subsequent vehicle today.
Qualifying as a fleet customer
For starters, most dealerships have conditions in place which need to be met for customers to qualify for a fleet deal.
It’s not the same as just rocking up and buying a car in your own name; you need to meet certain conditions to get access to discounted fleet pricing.
For example, you must have an ABN and be registering the vehicle(s) in the business entity or nominated leasing company’s name.
In addition, dealerships may require you to already have an existing fleet of vehicles (perhaps three and above or more) or commit to purchasing a certain number of new vehicles over the coming year.
You may also find that a dealership has different fleet plans and discount structures available for different sized businesses and budgets.
Check the website of each dealership you’re interested in buying from, or contact the sales staff, to find out about their specific requirements.
Choice of vehicles
While in the past fleet car options were rather limited, today most dealerships are fairly flexible about which makes and models you can choose from.
When investigating fleet options though, check with the salesperson to see if there are any limitations on which vehicles you can get fleet pricing on.
The age of a car may come into play, too. Many dealerships will only work with newer models for fleet sales.
When selecting vehicles, don’t forget to consider how they will be used, too (e.g. for different terrains, to cart equipment, or for long-distance driving).
Like with any car, when you buy fleet vehicles you have to ensure the maintenance of them is kept up.
This is important not just for warranty but also to keep the vehicle safe for your drivers.
Remember that you’re responsible for making sure cars driven by workers are serviced and maintained.
If you don’t adhere to a schedule on this and an employee is injured because of vehicle issues, you may be held liable.
When comparing fleet options, look into what maintenance is provided by the dealership, and if you can get discounts on services and other jobs over time.
Of course, one of the most important factors when buying a fleet car is the price.
There are numerous options to choose from when it comes to how you set up vehicle ownership.
For example, you may decide to get a loan in your business name to purchase the car outright, or perhaps even use saved-up funds.
Perhaps a commercial hire purchase might suit you better. With this setup, you can repay the loan on the car at any time.
Alternatively, there is an operating lease. This is like a long-term vehicle rental where you get exclusive use of the car for a pre-determined period.
A finance lease is another choice.
This enables you to lease the vehicle for an agreed time from the financier, who legally owns it. At the end of the term you can make a final payment to own the car.
Chattel mortgages also exist. With this set up, you take immediate ownership of a vehicle but the financier has a mortgage over it until repayments have been made in full.
If, instead of buying the vehicle yourself, you want to provide your employees with the option of salary packaging a car they can use for their own personal use too, a novated lease may be the best option.
A novated lease enables employees to pay for a car and its running costs from their pre-tax salary. This creates an agreement between yourself, your staff member, and the financier.
Each purchase option has different pros and cons to weigh up, particularly when it comes to tax benefits and obligations.
Always do your research and speak with your accountant and/or financial advisor before making a decision.