Buying a car, truck, or any other business equipment can be an exciting but overwhelming experience. However, before purchasing, you must consider the best time of year to attract the best offer.
As the year approaches, many businesses selling products offer lots of holiday discounts while others are looking to clear their stock to make for new stock. This makes December the best time to make purchases, and don’t forget the tax write-off.
Before making any buying decision, you must do your research to ensure you get the best offer. Therefore, if you are considering buying a car, truck, or business equipment, discuss below why it could be a smart move at the end of the year.
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Why You Should Consider Buying a Car, Truck, or Equipment Before EOY
When running a business, you are bound to look at all ways to minimize your expenses. And if purchasing before December 31st saves you a chunk of money, then go for it. Let’s see why many businesses consider making big purchases, such as a car, truck, or equipment, at the end of the year.
Discounts on Outgoing Models
When it comes to cars and trucks, different brands roll out new vehicle models at the start of each year, which means that the previous model is considered old.
As such, the price of the last model is sold at a hefty discount to make room for the new models and also to entice buyers.
So, if you are attracted to a certain car model, you can wait until the end of the year to make your purchase, saving you thousands of dollars.
Take Advantage of End-of-Year Sales on Stock Clearance
Apart from discounts on outgoing models, dealerships also have end-of-year sales, offering even more deals and incentives. These sales can include cash-back offers, free upgrades, or special financing options.
So, if you want to upgrade your vehicle, keep an eye out for these offers. You can do that by visiting several dealerships to ensure you are getting the best offer.
This also applies to equipment, so always do extensive research on the pieces of equipment your business needs and wait for December to snag the best discount offers.
Tax Credits and Incentives
For business owners looking to buy a car, truck, or equipment for their company, there may be additional tax credits and incentives available at the end of the year. Rely on a tax guide to understand how buying the vehicle will affect your taxes, especially during tax season.
For instance, if you are buying a car or truck for your business, you can use two options to write off your auto expenses. These include:
The Mileage method
This is a process where businesses use mileage to expense their business vehicle usage. They are deducted as follows:
- Business: $0.54 per mile
- Charity: $0.14 per mile
- Medical and logistics: $0.19 per mile
- Personal use: no deductions
Many business owners use the mileage tax write-off option, as it’s simple and easy to use.
Therefore, if you purchase a vehicle for personal use and still want to enjoy some tax credit, it’s best to use it for your business. If you use more than 50% of your vehicle for business, you are allowed to write off the cost of your repairs.
Actual Expenses
This is where businesses use the actual auto and equipment expenses for tax write-offs. As such, companies need to track their fuel usage, repairs, maintenance, insurance, and depreciation. Note that you can switch to the mileage method midway if you choose this method.
Higher Depreciation Value
One often overlooked benefit of buying a car at the end of the year is its higher depreciation value. Since the purchase cost of the car, truck, or equipment is regarded as a capital expense and lasts more than a year, it is not deductible.
Section 179 deduction permits business owners to deduct approximately $1,160,000 of the cost of qualifying new or used property, equipment, or vehicle.
Therefore, purchasing towards the end of the year allows you to enjoy tax savings now as the depreciation cost is calculated immediately instead of waiting for several years from now.
Updated features
Although outgoing models often come with discounts, it’s important to note that they still have great features and technology. However, if you want the latest and greatest in terms of features, buying at the end of the year can also be a good option.
You’ll get a brand-new car with all the updated features without paying full price. This is because the vehicles and equipment have been reviewed, and the manufacturers have identified all the shortcomings and made all the updates.
Tips to Use When Buying a Car at the End of the Year
If you are looking to buy a car, truck, or equipment for your business at the end of the year, make use of the following tips to ensure you are getting the best deal.
Do Your Research
Like with any other major purchase, doing your research is important. This includes visiting at least three dealerships and researching different models, features, and prices to ensure you’re getting the best deal possible.
Look for Low-Interest Rates
Apart from discounts and promotions, look for low-interest rates when financing your vehicle. The end of the year is a great time for dealerships to offer competitive rates to attract buyers.
This is a plus as many lenders and financial institutions offer low interest on car loans at the end of the year. This translates into reduced financing costs for your overall loan.
Negotiate
Don’t be afraid to negotiate! Remember that dealerships are looking to clear their stock before the end of the year, so use this as leverage when negotiating for a better price and other incentives.
Even if the price does not reduce as you had hoped, you may get other benefits, such as backup wheels and window tinting.
Final Thoughts
Buying a car at the end of the year can be a smart move for businesses. This is because they save thousands of dollars by purchasing outgoing models, holiday discounts, tax benefits, and less competition from other buyers.
However, before making your purchase, do your research and make use of the tips above to ensure you are getting the best deal possible.