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As your company expands, there are business assets that you will need. For starters, you might need to purchase an additional vehicle for your business. Having an extra company car can make it easier for your employees to run their business errands without causing delays for anyone else in the business. And in doing so your company should be more productive.
However, buying a car without financing can leave a dent in your business cash flow. Luckily, with vehicle and asset finance your business should afford a car of your choice. Below are a few helpful tips on how your company can finance a business vehicle.
How much is your business willing to spend?
You need to look into your company finances and decided how much you’re willing to spend. Once you have decided what the budget is then you can shop around. Think about whether the business can afford to make a deposit on the vehicle as that would be a great start on your loan.
You can use a finance calculator provided by your lender, to assist you in deciding whether you are going to pay monthly, quarterly, twice a year, or annually. Using a finance calculator helps you work out your finances before actually going to a lender. They give you information which you can work out with your financial team before going to speak with a financial advisor.
Choose the right car
It’s important that you choose the right company car. The size of a car is extremely important, as you don’t want to find yourself stuck with cars that are too small to provide the efficient service needed for your business.
If your job requires you to drive under harsh conditions, such as on gravel roads, then find a car which is made for those roads. If you’re only planning on using the car around town for short trips then find a small car that's ideal for that. Also, look into which other add-ons you might be interested in.
With today’s advanced technology, there are plenty of useful add-ons such as parking assistant, blind spot detection, autonomous braking sensor, speed limit monitoring system, or even a wireless charger. When thinking about car ad-ons it's also important to think about the person whose driving at what they might need, and don’t forget to choose add-ons that enhance safety measures.
Check your company credit profile
If you’re planning on going to a registered financial service registered credit provider you will need to check your business credit score. Having a good credit score will allow your business access to financing. If you need to improve your business credit score then you should pay all your debts on time.
Another way to boost your score is to settle your small debts and closing credits your business no longer needs. Keep in mind that lenders will also want to see the owner or owner’s personal credit score too before approving your loan.
If your personal and business credit score is good, your business will be able to go to a licensed financial service. Keep in mind that your business has to have been up and running for a minimum of two years in order for it to get funding.
Documents required for vehicle financing
When going to an authorised financial service you need to have all the required documents. Having all the necessary documents beforehand, in order for your loan application to go smoothly. The documents you need include:
- Your company’s registration and VAT number
- Banking details and the business's balance sheet
- Registered address and the business contact details
- Details of owners, e.g director, trustee, and members
- Details of what you’re planning on financing
Buying or leasing your vehicle
You have an option to lease the vehicle or buy it and add it to your business assets. In South Africa, there are many lenders who offer small business vehicle financing in order to help business purchase new vehicles.
With vehicle and asset finance you can buy or lease the car of your choice, depending on affordability. If you are planning on buying a vehicle you are given the option to either buy from a supplier or private sale. There are many pros and cons of leasing or buying a vehicle, but whatever you decide make sure it benefits your company.
Make sure you’re covered
Once you have received small business asset financing from a lender, make sure you insure everything. Car insurance is very important, with so many accidents on our roads every day it's important that you have cover. Without car insurance, your car is a risk to your business every time it’s on the road.
The amount of crime we live with today leaves us no choice than to get car insurance, especially when at times we have no control over what happens in our lives. In the unfortunate event that you are involved in a hijacking, your car catches fire, or you’re involved in an accident, it’s your business responsibility to keep the car insured should anything out of your control happen.
The content in this article was provided by Rogerwilco – a South African marketing agency based in Cape Town.