The cornerstone of every trade business is your trusty work vehicle. Whether it's a van or a truck, a ute or a station wagon — it's worth buying something reliable as well as practical. This is your livelihood after all!
When buying your new or preowned vehicle, there are a few things to think about. Remember, different people will put a different level of importance on these aspects. Once you've checked over the factors below, it should become clear whether you need a brand-new vehicle, or if preowned will do just fine.
Can you invest in a new vehicle? Find out with our free Cash Flow Forecast Calculator!
Short on time? Skip ahead!
- 1. What is the difference between preowned & certified preowned?
- 2. Financial considerations
- 3. Convenience
- 4. Appearance
- 5. Final verdict
1. What is the difference between preowned & certified preowned?
Certified preowned vehicles (CPO) are modern second-hand vehicles that have passed a thorough factory inspection and gained 'certified' status. Certified preowned vehicles are often low-mileage and in excellent condition. They're as close to 'new' as you can get without being the first owner.
Different manufacturers and dealers may have different requirements for 'certified' status. It's worth looking at exactly what 'certified' means before purchasing a certified preowned vehicle.
The benefit of certified preowned vehicles is the balance between affordability and quality. It negates the uncertainty of buying second-hand on the private market, while providing you the peace of mind of a factory vehicle.
2. Financial considerations
The financial aspects are usually front and centre for trade business owners. A new vehicle is obviously going to cost more than a preowned vehicle, but new vehicles also depreciate fast. It's worth checking with your accountant if you can mitigate depreciation through tax deductions.
- 🇺🇸 USA business tax write-offs
- 🇬🇧 UK business expense claims
- 🇦🇺 Australia business expense claims
- 🇳🇿 New Zealand business expense claims
If purchasing the vehicle outright, you’ll keep more cash in your pocket if you go with the preowned option. But if you’re looking to finance a preowned vehicle, lenders can be particular about its age/condition and may request a viewing for a value appraisal before lending against the new asset.
Traditionally, vehicle finance or debt over a vehicle has been considered ‘bad debt’. But financing a vehicle through your business does have its benefits — namely, cash flow. Paying the cost of the vehicle off over three to five years means you could retain money in your account and inject it into business growth instead.
Tim Cullen, Director of TradieSpec, a fast-growing vehicle hire business, says business asset purchases should always be considered carefully and in line with your business needs.
“Work levels for tradesmen can fluctuate throughout the year so it’s important to consider when you will need another in your fleet. We see too many tradesmen take on a vehicle to their fleet, only to have it collect dust for most of the year back at the office.”
3. Convenience
New vehicles come conveniently packaged with dealership addons and upsells. 'Bonuses' like capped-price servicing, dealer delivery, or quick finance approval processes can be beneficial — especially if you’re trying to get a vehicle into your fleet quickly. Extended five or seven-year warranties can often become invaluable on a vehicle that will see a lot of miles.
Some upsells aren't worth it, so read the fine print. Unnecessary or overpriced insurance is one of the most common. It's usually best to avoid this unless you truly need it.
4. Appearance
A shiny new vehicle can do wonders for your brand image. Rocking up to a job site or client's house in a clean new vehicle with crisp business signage on the door can build credibility and make a good first impression.
Competition for work is strong so when appearance can be the difference between winning and losing a job, it’s worth presenting well. That's not to say a preowned vehicle can’t be cleaned up, but a modern vehicle will present an additional air of success, instilling confidence in your customer.
5. Final verdict
Given the important role a vehicle will play in your business (especially if you're just starting out), we think buying new is great if you can afford it. But if finances are your main concern, you might be forced to go preowned. Certified preowned is a great balance between both options.
Just consider all the factors and come up with a pros and cons list for your individual situation. The best option for you should soon become clear.
Want to plan ahead before making a big decision? Use our free Business Plan Template!
Please note: this article is a brief overview of new vs preowned vehicle purchases and is not intended to be financial advice. We recommend speaking to your accountant before making any important financial decisions.
