Buying Commercial Vehicles

March 18, 2013

Compare leasing versus buying commercial vehicles, learn where to find the right dealers, and get tips on commercial vehicle financing.

Commercial vehicles or those intended for business use often come with various discounts and incentives designed not only to entice the buyer, but offer cash discounts to help the budding business owner. Different manufacturers offer a variety of discounts and incentives that either help the owner to accessorize the vehicle for a specific task, or supply cash rebates to help save money on the purchase.

  • Fleet operations. Manufacturers offer discounts to fleet owners who fall under a certain criteria. This type of incentive is ideal for the small or medium business owner who chooses to take anywhere from 5 to 15 units of a particular vehicle for commercial use. The fleet owner could either get a huge discount or be offered a free vehicle for every fleet purchase. The buyer will also have the ability to configure the vehicles according to their intended use.
  • Farm operations. Vehicle buyers who intend to use the vehicle for farm or agricultural use are offered a cash allowance for the purchase of such a vehicle. These cash allowances are significant enough to be used for vehicle upgrades or other accessories needed to help the vehicle function optimally for the given task. The cash allowance could range anywhere from $200 to $500, depending on the type of vehicle purchased.
  • Discount programs. Car manufacturers offer various discount programs for new college graduates or military personnel in active service. Each manufacturer has a different discount program that enables a buyer to procure the vehicle of choice at the presumed dealer cost. Discount programs will vary according to state, and it would be best to visit the dealer or browse the Internet for discount deals available in your area.

Commercial Vehicle Financing
If you're thinking of purchasing a commercial vehicle for your business, such as a delivery truck or a repair service vehicle, you should know that purchasing a commercial vehicle is a little different than purchasing a personal use car or truck. If you're paying cash, the only difference would usually be how the vehicle is registered or titled, as it would usually be put in the name of the business. However, if you will be financing your new commercial vehicle purchase, there are quite a few other things that need to be considered.

Finding a Commercial Vehicle Dealer
Not all new car and truck dealerships are prepared to provide commercial car buying services to businesses. Make sure that the car dealership you plan on making a purchase from is equipped to handle the special needs of a small business. For example, you need to ensure that the finance office is well acquainted with small-business finance options for vehicles, as well as able to deliver vehicles that are acceptable for your business needs. While a regular car or pickup truck may meet your business needs, you may require special vehicles such as customized delivery trucks or panel vans that may not be available at some dealerships.

There are, however dealerships that deal primarily in business vehicles. These dealerships generally sell business-type trucks and delivery vehicles that are already equipped with most of the features needed by small businesses.

Commercial Vehicle Financing Tips

When you find the vehicle you want, you will probably find that financing a commercial vehicle can be a little different than what you may be accustomed to. If you will be financing the vehicle in the name of your business, you should know that not all banks and lenders are willing to do this.

Find a bank or lender accustomed to making business-vehicle loans. If your business has been in operation for a while and is well established, you'll probably be able to finance the vehicle solely in the name of the business and use only the business's credit. However if your business is not well established, most banks and lenders will require that you personally guarantee the loan and they will check your personal credit score and history.

Even if you are required to personally guarantee the vehicle, after a couple of years of timely payments, you may be able to have the vehicle refinanced solely in the name of your business.

Commercial Vehicle Insurance
When you purchase a commercial vehicle, make sure that you have adequate insurance coverage. While this may appear to be very similar to a personal vehicle purchase, you should understand that policy limits for most commercial vehicle coverage policies are generally much higher than with personal car insurance policies. This is because the potential liability in an accident involving a commercial vehicle is generally a lot greater.

Therefore, you can expect to pay substantially more for commercial vehicle insurance than you do with a personal vehicle. While the insurance is certainly more expensive, the coverage may actually save you a lot of money in the end because of reduced liability to your small business and to you personally. A lack of commercial vehicle insurance coverage can often be devastating for a small business if there is an accident.

Ways to Save on a Commercial Vehicle
Besides negotiating a lower selling price, finding the best interest rate loan and other common ways of saving money on a vehicle purchase, you will also be able to take advantage of the many business-related tax incentives that your state government and the federal government offer for vehicles that are used in the business.

Normally, you should be able to deduct the finance charges on the loan as well as fuel and maintenance costs for the vehicle. In addition, most small businesses save money on their taxes by depreciating the vehicle and claiming credit for the depreciation on income tax returns.

In order to find out how a business vehicle can help you save money on your business taxes, you should ask your business accountant to provide you with more information. Using a vehicle for your business that is titled and registered in the name of your business can help your business save a lot of money; furthermore, titling a vehicle in the name of your business may also help shield you from liability if the vehicle is involved in an accident.

How to Find Dealers for Commercial Vehicles

You need to find dealerships that offer commercial vehicles for sale. Not all dealerships sell commercial vehicles, and even the largest pickup truck dealerships may not carry them.

Visit Commercial Vehicle Dealers Online
There are a number of commercial vehicle dealers that have websites on the Internet. In fact Commercial Truck Trader is one of the largest commercial vehicle dealers on the Internet and offers tens of thousands of new and used commercial trucks and vehicles for sale. You can use the website to quickly locate new and used commercial vehicles in your local zip code or from around the country.

Ask a New Car Dealership
If you're searching for commercial vehicles, then asking someone at a local new car dealership may help. While most new car dealerships don't carry commercial vehicles themselves, they may be able to direct you to a dealership that does. However, you should be prepared for the sales pitch for one of their pickup trucks, as they will generally assure you that pickup truck can meet your business needs. Just listen to the sales pitch and see if they have some information about the location of a dealer that sells the type of vehicle you need.

Should You Buy or Lease Commercial Vehicles?

Businesses that are looking at commercial vehicle deals may want to know if it's in their best interest to buy or to lease a business car or other vehicle. Some basic guidelines apply to figuring out your best deal for a small business.

Drive Term
The general rule is that if you want a vehicle for over five years, it's smarter to buy it. For shorter terms, a lease may be more favorable.

Some experts claim a lease is better for high mileage vehicles (such as those used by regional sales staff). The only caution is that a business leasing a vehicle should make sure the mileage doesn't exceed any specific limitations mentioned in the lease agreement, as overage miles can be pretty costly.

Those doing small business accounting may be able to decipher whether a capital or operating lease may lead to additional tax benefits according to current IRS tax codes.

You should think about whether you want to extensively customize a vehicle. If so, buying is the way to go. A leased vehicle often can't be customized for advertising purposes, and over a vehicle's lifetime, its ad capacity can add up to big dollars in terms of visibility for a business.

Many businesses opt to let a worker pursue buying or leasing a vehicle, where that staffer or contractor will be reimbursed for costs. This alleviates some of the liability for a business, but also puts that liability on the individual who contracts for it.

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