How does getting a business car through car finance benefit a business owner?
As a business owner, you really shouldn’t underestimate the value that the right set of wheels can have for your day-to-day, week-by-week, and month-by-month operations.
If you run a limited company, you might very much need a business car in order to meet up with potential investors or clients, or to commute to different places. In this case, you may want to think about purchasing your business car through car finance. After all, car finance comes with its benefits.
Here are some reasons why car finance can truly benefit a business owner.
Reimbursement expenses
If you purchase a business car through your own personal finances, you will find that you will be allowed to claim a tax-free allowance. This tax-free allowance can be from your company and can take into account business mileage. The mileage includes the purchase of the vehicle and any running costs.
However, what’s more important is that if you purchase a business car, you can actually send the costs to your company. Your company can then pay a reimbursement expense without having to pay any personal tax.
As it will be easier for you to purchase a vehicle on car finance, you will find that you will be able to save a lot of money by making it a business car. Just make sure that it is linked to your limited company.
Capital allowances
Car finance for business owners shouldn’t have to bankrupt you or your business. In fact, should you have to take out a loan to pay for your business car, you can have your business compensate you for the interest payments. This is because they are classified as a company expense.
In addition to this, your company can even ask for capital allowances to help pay for the overall expenses of the vehicle. This will help your business deal with any taxable profit.
Just don’t forget that capital allowance is mainly for business cars/cars that are fully dependent on CO2 emissions. So be wary of this if you purchase an electric vehicle.
Business expenses
Are you going to buy your business vehicle with your own money? In this case, you will show that your company does not properly own the vehicle, even if you have taken out car finance to pay for the vehicle instead of paying for it in cash.
Therefore, your company will be able to pay for the car as a business expense. Just keep in mind that 15% of these expenses will not be considered as payable for your business.
Improving your credit score
One of the best things about purchasing a vehicle on car finance is the fact that you can help improve your credit rating with every bill that you pay off. Therefore, if you own the business, and use the car to enhance it, you will find that your good credit rating will be extremely useful when it comes to getting approval for a future loan.
So, it really can be useful to take out a car finance loan to ensure you can prove to the bank or lender that you are a trustworthy person capable of consistently making your repayments.
Company carpools
It can feel like a lot of pressure has been taken off you if you pay for a business car through car finance. After all, you don’t need to have the money straight away. Instead, you can pay it off every month for a few years.
So, if you make the vehicle a carpool, you can take the VAT off it when it comes to its payments. Just keep in mind you will only be able to do this if you keep the vehicle in your place of work overnight, prove that it is not just used by one person, and have it available for use by all staff who work at your company.
If you can prove that you do these things, you will find that it will be much cheaper to pay off.
Are you ready to get your business car?
It’s understandable that you may think a business car is too expensive to purchase for your company. But honestly, if you purchase your vehicle on car finance, you will almost certainly see that your business can only benefit from having it.
From helping your employees to commute, to having it available for product transfers, you will be happy that it is available for you and your team. After all, the right business car can be an extremely useful asset, even aiding the broader sustained growth of your company.
Do you have any further questions about business car finance before you commit to such a deal? If so, please don’t hesitate to contact the Car Finance Genie team today, by calling 01277 583 046.
