Forums: Discussions for entrepreneurs and small business.

I`m in the process of launching my interior decorator business. I have saved up a little over 6 months living expenses. I don`t have any financial debt and my start up costs are paid for (I have been purchasing things over the last year with cash). 

I have been working under the assumption that because I live in San Francisco, I wouldn`t need a car right away to run my business. But after further thought, not having a car seems very unpractical because I will be taking clients to showrooms etc... I recently resigned from my day job (actual end date is end of October) and didn`t want to stay at my day job for another 10 months just to save up for a car.

So my question is: should I finance a used car? I do have the dollars in my budget for a monthly used car payment. I`m just torn about doing this because I am so against borrowing money, but I feel like I need a car to get this business off the ground. I always knew that I would need a car, I just thought that I could wait a while and now I`m seeing that I can`t.

nohea,

Sounds like you have done an excellent job of planning and preparing to start your business.

As the old saying goes; Cash is King. This is especially true in a new business - so I would conserve the cash and get a loan for the car.

 

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

well my only concern with financing a car is that you`ll now have a loan on your credit and you need to weigh that against a possible loan for your business later on. Now from your post it seems like everything is paid for, so I would have to say go for the loan and keep the cash for a rainy day. You might want to make "extra" payments to get the vehicle paid off more quickly, but that`s your call.

Sounds like your heading in the right direction! Good luck!

-------------------------

He who gets greedy like a pig, gets slaughtered like a hog!

My opinion is get a loan and get a car. You actually need loans like that to estblish good credit. If you pay cash for everything there is no history for people to use to eveluate you down the road for a business loan (if you need it)

 

All,

Thanks for the feedback on the car. I have decided to buy a car next month and while I`m launching my business make the regular payments. Once my business is bringing in more money than I`ll pay the car off in big chunks.

Thanks,
Calie

Hi Nohea,

I don’t buy used cars anymore unless they have less than 6000 miles on them. Reason for this is two fold.  First, most factory warranties are still in affect at this point, even on the tires.  Second, cars with a lot of miles can turn into real money traps when parts start breaking down.  A newer car will give you some breathing room between when the warranties go out of affect and the parts start breaking down.

If you do go for a used car, check with the local banks to see if they have a list of recent repossessions (newer cars).  They do have such lists in the loan department and you might be able to make a deal on a recently repoed car. 

You can also check with auto dealerships to see if they have any salesman cars or loaners that they are getting ready to sell off.  Many times these cars are late model with few miles.  They also have received good maintenance.

Rental car companies periodically sell off cars also.  I would stay away from these cars.  They are generally well maintained.  But, they have reached the end of their useful life (high mileage).   

 

-------------------------

The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.

If you only need a car occasionally you could rent a car.   It may be less expensive than  all the costs of owning a car...insurance, maintanence, parking.

Just a thought!

Kathleen

Hi Kathleen,

Renting a car is an option I`ve thought about. I`d be open to that for the short term. I`m just concerned that if I wait to finance a car (meaning after I stop working for corporate America, I won`t be able to get a car loan). Isn`t it harder to get a loan when you don`t have a full time job?

 

nevadascul ,

Thanks for the tip on the repos from the local banks. I didn`t even know that was an option!

-Calie

I am not a loan expert, I am just speaking from my own experience. It can be harder to get a loan without a full time job, or without a history as self-employed. With decent credit you can apply for a "no income verification" loan that will charge a higher interest rate.

My personal bias though, is to save your money and  buy a car you can afford to pay cash for. I have been self-employed to one extent or another for around 18 years now, and when your monthly income is going up and down and sometimes non-existant, it helps to have as few monthly payments as possible.

Kathleen