If you are considering buying a vehicle for your business, you might want to rethink buying or leasing a new car and instead, consider the value of a used vehicle. But then, with clients relying on you to make deliveries or drive to meetings and events, would a new car be a better choice?
There is probably no single right answer, so when you think about whether to buy new or used, consider the flowing points.
As we stated above, there is no single correct answer for every business on whether to buy a new or used vehicle. It will depend on the individual needs and financial situation of your company combined with the mechanical confidence you have in the available used vehicles. If you measure the pros and cons and keep your budget limitations in mind, you should be able to come up with a workable solution that keeps your customers, and your accountant, happy.
- Value loss: New vehicles lose thousands of dollars through depreciation the moment you drive them off the lot. And while you might not plan on reselling the vehicle anytime soon, your loan will be for the total asking price of the vehicle, not for that amount minus depreciation. Not only will you lose money just by driving your new vehicle off the lot but you’ll also be charged interest on that lost value and be forced to pay insurance premiums for limits based on that amount.
- Insurance: Depending on the car you choose, insurance could be more or less expensive on a new vehicle than a used one. Talk to your insurance agent about the different insurance costs based on vehicle safety features, make and model and determine what the best options are for either route.
- Reliability: If your company vehicle will be responsible for making timely deliveries for your customers, then you may be concerned about the reliability of a used vehicle versus a new one. Before you buy any used vehicle, you should allow a mechanic to look at it. Explain to them how you plan to use the vehicle so they understand the potential wear and tear, and ask for an honest assessment of it compared to a newer model in terms of maintenance costs, reliability and overall mechanical health.
- Warranties: New cars, trucks and vans come with warranties that ensure certain mechanical problems are repaired with little or no cost to you. Harder to find are preowned vehicles with some of the same guarantees, even on a more limited time frame. However, it’s important to remember that most new cars don’t need the kind of repairs that warranties protect against, which is why it’s not cost prohibitive for automakers to offer them.
- Affordability: If you are looking for a large passenger vehicle or one that will carry large quantities of supplies, your choice between new and used may just be about price. New vehicles are often exponentially more expensive than used. If you are a small startup trying to avoid debt, then you may be more comfortable with a small loan for a vehicle than the large debt that can come with a new vehicle. If you’ve been in business for a while and are ready to upgrade or expand services, then you might be willing to take a greater financial risk in light of the potential financial rewards.
For more information about Roselle auto insurance for used and new cars contact us at 630-442-0282.