3 potential ways for a business owner to save money on their next car

by Startacus Admin

Naturally, if you run a business, it will come with overheads that you have to keep in check – and those include the cost of transport. If you’re currently drawing up a budget and need to make room in it for a car you’re preparing to purchase, you might be wondering where exactly the money for it is supposed to come from.

Fortunately, there are various ways in which, as an entrepreneur, you can buy a company car – and it doesn’t necessarily always involve reaching into your own pocket and paying the whole asking price upfront. Here are some easy-to-overlook ways to slash the usual cost of sourcing a corporate car.

Buy the car as an import 

Many drivers perceive, rightly or wrongly, that they can save money by importing a car instead of obtaining a ‘homegrown’ vehicle. Why “rightly or wrongly”? Well, because, quite frankly, it can go either way, largely depending on whether you import a “grey” or “parallel” car into the UK.

No, these terms aren’t used here in reference to colour or parking. “Grey” imports are non-EU-approved models imported without a UK specification, while “parallel” cars are imported with both a UK spec and EU approval. To meet UK regulations, the former cars often need converting at the owner’s cost.

Therefore, if you don’t want that cost cancelling out what you initially saved by importing, you should probably opt for a parallel import, as the Motoring on a Budget websiteimplies. Imported cars also tend to fetch higher insurance costs, although taking out specialist import car insurance could help to guard against that happening. 

Lease the car rather than buy it 

If your line of work calls for you to regularly update your vehicle to the newest and most efficient model available, you would be better off leasing your next car rather than buying it, says smallbusiness.co.uk.

This strategy will let you easily swap out your automobile every three to four years. That way, you don’t have to worry about doing without a guaranteed manufacturer’s warranty, while you can keep the ongoing maintenance costs low, too.

Especially helpfully, monthly lease payments can be lower than equivalent loan payments, even when the same vehicle is involved. This may enable you to free up more money that you could redirect to other parts of your business. 

Buy or lease the car through your limited company

One major perk of forming your business as a limited company is that its funds could go towards your next car – whether you buy or lease it. However, it’s a much more complex process than you might initially realise, as Entrepreneur Handbookcautions, citing business tax implications and added costs.

Keep in mind before purchasing a vehicle in this way that it will only be possible to claim the VAT back on the vehicle if it is used strictly for business purposes. Using the vehicle privately will incur a taxable benefit in kind. Meanwhile, leasing your vehicle through the firm will bar you from being able to claim any capital allowances. 

As you can see from the above, there are various proven ways to slash the cost of a new car as a business owner, beyond simply ‘shopping around’. Nonetheless, you are also urged to carefully bear in mind the practical and financial implications of each of these possible routes.

 

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Published on: 30th June 2020