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Wheels and Deals

Take It Easy

Negative equity could be adversely affecting your business. Kelley Blue Book's market research shows buyers who financed with little or no money down and for a six- or seven-year term find they owe more than the vehicles are worth, piling on debt.

Researching financing options is a snap if you know how to navigate the internet, and shopping around and arming yourself with information before you visit the dealership can save you percentage points in the long run. Find out if you qualify for your own bank or union loan, and know your credit score so you're prepared for high financing rates if your score is low.

Some business owners use credit cards for down payments on vehicles. OPEN from American Express provides its Platinum Business FreedomPass card users with a credit line up to $50,000 and no annual fee. If your employees use the cards for purchases such as fuel, repairs and other business items, you earn points.

Fleet and commercial customers at GM have an edge with a Business Choice card that offers incentives, promotions and credit, including 3 percent off GM vehicles. Targeted at small businesses that buy or lease vehicles, Chase Business Card offers more benefits, including an expense-management tool that has spending limits for employees.

General Motors Acceptance Corp. offers several fleet-financing options. The Commercial SmartLease program allows customers to pay for only the time period they expect to use the vehicle during the lease term, plus a rent charge, taxes and fees. The advantage of this over traditional purchase financing is that it lowers monthly payments for better management of your cash. There are no resales or trade-ins to worry about, and there could be tax benefits. Another GMAC plan, ComTRAC, allows qualified buy or lease customers to select specialized upfits in the vehicles. Unlimited mileage is offered, and there are no excess wear-and-tear charges, which are often a blow to the budget.

Car companies have their own financing arms. Ford's commercial credit lending arm at www.fordcredit.com has many financing programs, including flexible term limits, simple billing systems and statements, and a no-float period after payments are received. Ford's CommercialLeasePlus and CommercialLease both offer open- and closed-end lease lending programs with tax advantages.

At Chrysler, the Business Vehicle Finance Group provides custom financing packages. The group offers payment plans to suit your business cycle, with delayed first payments, token payments, and balloon or accelerated payments.

Several independent financing services will help businesses lease or buy. Primus Commercial Lending offers an open-end leasing program geared specifically toward the commercial customer, generally with no down payment, flexible terms and residuals, and consolidated monthly billing. Another lender, PHH Arval, works with businesses to tailor a financing program with several funding choices, such as a floating funding source that allows you to switch to another rate for the remainder of your vehicles' service lives, or a one-time option to fix the rate of interest on a vehicle-by-vehicle basis.

Insurance for Less
A clean driving record is one of the quickest ways to keep insurance costs down, as are safety features on your vehicles. A higher deductible is a third way to lower premiums. Ask for discounts, shop around, and check out websites such as www.intellichoice.com and www.insweb.com, where you can compare quotes. The Insurance Information Institute advises checking insurance fees before buying a vehicle. Another company, www.fleetriskadvisors.com, keeps tabs on drivers and estimates their cost to your business with regard to risk and profitability. One client found that newer hires, rather than long-term employees, were less of a driving risk. Many insurance companies offer low-mileage discounts. If you're leasing, consider gap insurance that covers the difference between what your insurance company pays if your vehicle is totaled or stolen and what you owe the finance company on the vehicle.

At Your Service
If you own or lease a fleet, your local dealership is the obvious choice for servicing your company vehicles, but on-the-road repairs may necessitate a tow to another garage. No problem if you have a service card such as GM's Fleet Service Card-accepted at more than 600 GM dealers across the United States, whether the need is for fuel, maintenance or emergency repairs. It comes with an ID number, so only your drivers can use it, and only for the products and services your company has authorized.

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This article was originally published in the December 2005 print edition of Entrepreneur with the headline: Wheels and Deals.

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