The hardest part of running a car rental is buying cars.
The question is why?
- Acquiring the correct car for your fleet
- arranging the best deal for the purchase
- how are you going to fund the vehicles?
- Maintainable cost
- Disposal of Vehicle when you have finished with it.
Let’s do each step, one at a time.
Buy Cars – Acquiring The Correct Car.
Selecting the correct car is extremely important. what specification, model, colour, interior and transmission.
When purchasing take into consideration two things one is it what the customer requires and two will it be easy to dispose of once your finish with it.
Arranging the best deal for the purchase.
Heard of that saying if you don’t try?
Well, when buying a car it is always worth asking for a discount or making a cheeky offer. It simple like anything in the world there is a supply and demand equation in buying a car and if you are planning to buy a car do some research when the least car sales are. For example, if you purchase a car in February you are more likely to get a discount than if you purchase a car in March. Why? simple the new plate comes out in March so dealers do not sell as many cars in February, this gives you an opportunity to barter a good deal.
Buy Cars – Funding – How to Pay for the cars?
This is probably just as important as choosing the car. You have several options to fund a car ranging from balloon finance, straight HP and Cash Purchases. One of the most important things to ensure of is if your taking finance you have permission to sublet. This permission is an issue as it increases the rates the finance company charge. Why? simple normal car finance is based on the car and the driver, who is the only person driving the car. However, with car rental companies it could literally be anyone driving the car and hence it cost more. The second problem is there are not many providers about that actually provide this type of finance. If your accounts and bank statements are showing positive cash flow tier one finance companies will consider you. However, if you have issues with cash flow the only providers will be tier two funders who actually front load the interest. What does this mean?
What does this mean?
It means the interest will be added at the start of the agreement so if you decide the car is not working and you decide to sell after a few months you owe more than you borrowed a lot more.
The last way is to stock the vehicle and pay straight cash and try to dispose of the vehicle when it depreciates the least using expert data from the likes of CAP.
Buying Cars – Maintenance cost
This can vary between manufacturers so always check with the manufacturer what the cost of servicing is. Tyre cost and other maintenance costs which may apply. How often do you have to refill AdBlue etc.
Buying Cars -Disposal of Vehicle when you have finished with it.
What is your disposal strategy? Most people part exchange with main dealers. Wrong! The worse move they will give you a sub trade price and you can get a lot more by using a local dealer. Someone like Imperial Cars, Clive Sutton or Shaks Specialist cars all take cars on a sale or return basis and majority work of pictures and viewing on request. This will allow you the opportunity to utilise the vehicle until the last day.
Othe methods include auctions such as BCA.
Now that you have read the guide on how to buy cars for your fleet feel free to comment.