If you have established your business as an electrician, HVAC servicer, or dry cleaning company, having reliable transport is crucial to the success of your business. You may find yourself wondering, "How much is a company vehicle worth?".
Asking yourself this question is critical because planning the transport affairs of your business can help you manage costs. In case you're still finding the answer, here are a few aspects you should consider to arrive at the solution.
What Is the Value of a Company Car?
For many employees, a company car is a desirable job perk and, sometimes, a necessity. If you run a business that requires regular movement between different places, providing a company car for your employees is a wise choice.
If you are considering acquiring a fleet of company cars, here are several factors that affect the worth of a company car.
Loan or Leasing
You can acquire a company car through a lease or an auto loan. If you want to own the vehicle, you can obtain an auto loan. On the other hand, you can lease the company vehicle from Wilmar and incur monthly lease payments.
Each of these options comes with a monthly fee. Leasing is a reliable option because it saves you on maintenance, title and registration costs.
According to Statista, the average cost of leasing a vehicle in the fourth quarter of 2018 was $448.
Insurance
Acquiring insurance for your fleet of company vehicles increases the cost of owning and leasing a car. The insurance policy you choose should be sufficient to cover you and any employees titled to operate the vehicle during business hours.
Consider an auto policy whose limits are high enough to cover any bodily injuries and physical damage to property.
If you are leasing a vehicle or have an outstanding auto loan, acquiring GAP insurance can prove beneficial during an emergency.
GAP insurance covers the difference between the value of the car and how much you own. When you purchase a new vehicle, it starts to depreciate. A standard policy covers the market value of the vehicle at the time you make a claim.
In case your loan is higher than the value of the car, GAP insurance helps you cover that amount.
Car Taxes
You can use the expenses of a company vehicle as a deductible when filing your taxes. The tax laws allow you to calculate the deductible according to the business expenses or the mileage covered for business operations.
To ensure that you the IRS writes off the costs, you have to keep accurate records for all the charges you incur and the mileage you or your employee covers.
The expenses include tires, depreciation, insurance, interest on your auto loan, registration fees and other maintenance expenses.
If you choose to lease the vehicle, depreciation does not factor into your deductible. Instead, the IRS writes off apportion of the amount you extend to lease payments.
Fuel
Whether you decide to lease or purchase a vehicle, you need to fuel it. You can keep track of the fuel spent on the company car by issuing a fuel card to your employees.
At Wilmar, we provide a fuel card that your workers can swipe in more than 180,000 locations countrywide. A fuel card in an efficient way to keep centralized records of fuel usage for your company cars.
With sufficient records to refer to, it is also more comfortable for you to plan your fuel expenses.
Maintenance
Lastly, a company car requires scheduled maintenance to work properly. If your business owns the vehicle, then all maintenance cars fall under your bill.
However, under a lease agreement, a leasing company can cover some of the maintenance costs, which lowers your monthly bills.
Conclusion
Determining how much a company vehicle is worth can help you plan effectively. When making your calculations, seek the advice of an auto expert.
If you are still asking, "How much is a company vehicle worth?" contact Wilmar today.
