Commercial vehicles are mobility must-haves for all businesses, regardless of size or niche. With them, companies can transport goods or people to facilitate flawless transactions. Besides logistics and transport providers, restaurants, retailers, healthcare, and construction firms rely on trucks for daily operations.
Worldwide, there’s an increasing demand for commercial and fleet vehicles. And industry experts project commercial vehicle production to reach 27.9 million units by 2026 and a steady increase in the following years.
Whether establishing a new enterprise or preparing for business expansion, purchasing a commercial vehicle should be a priority expense. But hefty costs demand that business owners carefully consider their strategy in getting one.
Financial Considerations Before Buying a Business Vehicle
Can My Business Afford A Commercial Vehicle Purchase?
Buying commercial vehicles shouldn’t be taken lightly, especially for newly established businesses. Estimates reveal that a brand-new semi-truck can cost anywhere from USD$100,000 (mid-end) to USD$200,000 (high-end) and just about the same in other countries, including Australia. With such a high price tag, business owners must consider fleet financing to ease the financial burden of paying several thousand while waiting to earn their first few hundred.
Different providers offer financing options, from cash purchases to credit purchases and financial or operational leases. Contact your lender to determine all possible choices and pick one that aligns most with your needs. Compare their annual percentage rates (APR), which include the interest rate and all additional charges.
Which Features Do I Need?
Think of your current operations and how you may use the commercial truck to make your customers happy. In this age, consumers are used to fast and efficient service. Your commercial vehicle must have all the features you need to operate seamlessly, depending on the nature of your business. Depending on these desired attributes, you might need to shell out more, especially if you need a bigger-sized vehicle.
Service providers that need bulky tools, like heating, ventilation, and air conditioning (HVAC), would need a van with sizeable storage space for such pieces of equipment. Meanwhile, catering companies might need a truck with a big bed and cab sizes to accommodate people and food.
Buying a vehicle exclusively for its looks isn’t going to work in commercial settings. While your business vehicle’s physical appearance matters, its functionalities should be the primary consideration.
Is A New or Used Commercial Vehicle Better?
Does your business need a brand-new vehicle? Your answer to this question should be one of the primary considerations in getting a commercial vehicle.
While purchasing a new one has benefits, including fuel efficiency, advanced safety features, a lower carbon footprint, and all the bells and whistles, you’ll pay for such premiums by the vehicle’s price. Doing so doesn’t make sense, as these machines depreciate 11% as they’re removed from the dealership lot and lose 20% of their buying price after a year of ownership.
Gently used vehicles, which may have been used as demo vehicles or for other purposes, can be a good deal. Besides a huge price tag slash, these trucks are mostly still covered by warranty.
How Much Does Owning This Truck Cost?
You may be able to afford the commercial truck’s monthly fees, but have you considered the associated costs of vehicle ownership? Besides the payment, your business will consequently shoulder registration, repair and maintenance, and insurance costs.
Newly released trucks may not cost much to repair and maintain with proper use. However, their registration and insurance costs will be hefty, alongside fuel expenses, which are estimated to account for 30% of a commercial van’s operating costs.
As time is money in every business, every vehicle breakdown means income loss. Choose a reliable truck with the right features, from the engine to its size. Use it well and pay for regular preventive maintenance to spot and fix issues before they worsen.
Is Leasing Better Than Buying?
Study how the truck would be used. Is truck use tied to your operational hours, or must you use it 24/7? Do you intend to use the trucks for a long time for your major and business expansion? If you’ve answered yes to these, consider buying a new one.
Conversely, leasing is a good option for operating a seasonal business or managing short-term projects. In general, leasing might be the solution if you’re not sure you’ll still use the commercial vehicle for at least three years.
Compare your monthly amortization for purchase and monthly leasing fees. Most often, vehicle leasing costs will be cheaper, but the downside is you don’t get to own the truck unless you buy the vehicle for a specific price.
Commercial vehicles entail a significant investment for businesses that need them. As such, one must carefully decide the type of vehicle they need and its features. The right decision should be based on identifying your business requirements and considering your financial obligations before, during, and after owning a truck. If you can’t afford one yet, consider leasing options and build your budget before buying a commercial van.