Owning a business vehicle allows you to claim tax relief, including depreciation deductions. You can expect to pay in excess of $45,000 for a brand new car for your business and even more for a van. However, this is not the only expense to be considering. You will need to factor in other expenses such as commercial auto insurance. Here’s how to ensure you’ve got everything financially covered at the best price. Follow these tips so you can make owning a business vehicle as affordable as possible for your business.
Essential Auto Insurance
Commercial auto insurance is essential as it protects your vehicle and your business if an accident happens. Car and Driver reports that the median cost of commercial auto insurance is $55 per month. One way to save yourself a few dollars is to pay for the full year upfront rather than monthly.
Carefully look into the average insurance cost of the vehicle you want to buy a policy, and choose one that typically has a low price. You should also think about the type and amount of coverage you take out. Liability coverage is usually mandatory. But uninsured and underinsured cover and personal injury protection are often optional. The more coverage you opt for, the more you’ll pay. So, be sure to review every policy’s finer details before purchasing.
Mitigating Risk Factors
One big factor that can affect your business auto insurance is major traffic violations. These are things such as DUIs, driving while uninsured, and reckless driving. These types of violations make you a bigger risk to the insurance company. This can translate into having to shop around for auto insurance to get the best price.
The good news is that there are specialist insurance companies that provide road cover for convicted drivers. You’ll typically need an SR-22 insurance certificate which can be obtained from your insurance provider. This certificate shows that you are legally allowed to drive and will only cost you around $25.
You’re likely to have higher premiums as a result of your violations. However, having use of a vehicle is a big benefit to your business, so it’s worth it. For example, a vehicle is cost-effective as you don’t have to rely on third party delivery companies. You’re also in control of departure and arrival times which means better customer satisfaction.
Other Business Vehicle Costs to Consider
On top of insurance, you’ll also need to pay for fuel and maintenance costs. The cost of these will vary considerably depending on your mileage, location, and choice of vehicle.
You can however keep these costs down by shopping around for fuel using a gas app, such as Gas Guru. Gas reward programs are also good for businesses as you’ll get cashback and rewards for filling up. Or, you could buy an electric vehicle and slash your fuel costs further. Amazon for instance is even trying to convert their delivery fleet to be all electric.
Make sure you keep all of your receipts as you can claim these expenses back through your business. Regular services are also highly recommended. This will pick up any problems early, so you can deal with them swiftly.
Purchasing a Business Vehicle – Summary
A business vehicle can make a world of difference to your organization. While it does cost a fair amount of money, there are ways to reduce the price. If you are in the market for a business vehicle, do your research to determine the best ways to buy a car.
Also take into consideration the cost of insurance, fuel, and maintenance. In many cases, the benefits of having a business vehicle or fleet will outweigh any costs.