Business auto loans: What they are & how to get one Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to assist you make better financial choices by offering you interactive financial calculators and tools, publishing original and objective content, by enabling you to conduct research and analyze information for free to help you make informed financial decisions. Bankrate has agreements with issuers such as, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products are displayed on the site, such as, for example, the order in which they appear in the listing categories and other categories, unless prohibited by law. Our loan products, such as mortgages and home equity and other products for home loans. But this compensation does not influence the information we provide, or the reviews you read on this site. We do not contain the vast array of companies or financial deals that might be accessible to you. Thomas Barwick/Getty Images
3 min read published September 15, 2022
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Written by Bankrate Written by This article was generated by using automated technology. It was then thoroughly checked and edited by an editor from our editorial team. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to manage their finances by providing precise, well-studied facts that break down complex topics into manageable bites. Written by Mark Kantrowitz Reviewed by Nationally well-known expert in student financial aid Mark Kantrowitz is an expert on student financial aid as well as the FAFSA and scholarships, 529 plans, educational tax benefits, along with student loans. The Bankrate guarantee
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We are compensated in exchange for the placement of sponsored products or services, or when you click on specific links on our website. This compensation could influence the manner, place and in what order items are listed and categories, unless it is prohibited by law for our credit, mortgage, and other home lending products. Other factors, such as our own rules for our website and whether or not a product is available within your area or at your own personal credit score may also influence the manner in which products are featured on this site. Although we try to offer the most diverse selection of products, Bankrate does not include details about every financial or credit item or product. If you're in the market to finance a vehicle for your business, an auto loan might be a great option. The loan is usually secured by the vehicle, which implies that the lender can the vehicle if the loan is not paid back. Business auto loans may be used in order to fund the purchase of brand new or used vehicle -- as well as those that are modified for needs as a business -- and the loan terms will vary depending upon the lender. What is an auto business loan? A business loan is a loan which can be used to fund the purchase of a vehicle for business purposes. Like a personal car loan the car that is purchased is used as security. Certain lenders might require that the vehicle is only used for business-related purposes, and many require that the buyer must have an acceptable credit scoreeither personal, business or both. The loan can also be personally insured by the borrower which means it is possible that personal belongings of the borrower may be at risk should the loan is not repaid. How to get a business auto loan For a business loan it is necessary to first make some preparations. From there, it's like getting an individual auto loan -- though with some additional requirements. Make a budget: Whether you're purchasing a new or used vehicle, you will need to figure out the amount you can afford to spend on an annual basis. Determine how much you're willing spend in total. Recheck your credit score: Examine your personal and business credit scores and reports to find and correct any mistakes. It can take up to thirty days to get a lender to reply, so make sure you do it in advance of the date you wish to purchase. If you have a credit score that is high enough and your credit report is relatively clean, you may be eligible for a lower rate. Choose a vehicle: Compare your options to choose what kind of vehicle you're planning to finance. Some lenders may only lend on new cars, for example, while other lenders may place strict limits on the used cars they loan. Find pre-approved lenders: Compare with at minimum three lenders to decide which will provide you with an auto for business loan as well as what their terms are. Some lenders might require you submit proof that you are the owner of the business. The documentation you provide will be required to supply the employer's identification, or Social Security number, your business bank statements, business tax returns, the profit and loss statement along with cash flow statements and the balance sheet. You may also need to show proof of your personal income and creditworthiness. How do you get an auto loan for business loan When looking for auto loans to help your small company, there are three main choices: banks, online lenders, and alternative lenders. Banks that are traditional Traditional banks usually provide loans that have competitive rate and flexible terms for repayment -However, they might limit mileage and the vehicle's age. Business auto loan rates could fall to less than 3 percent if getting funds through the bank. Be aware that the process may be long and you'll have to submit a lot of paperwork. Online lenders aren't as strict as bank lenders however, they generally require a good FICO credit rating from the business owner as well as having some restrictions on the types of vehicles that are able to be purchased. It is possible to get approved, and the rates are usually comparable to a bank or credit union. Alternative lenders When you choose to use other lenders you'll typically find interest rates that start slightly higher. But there are usually looser restrictions on age and mileage as well as the process is significantly faster. Other alternatives to corporate auto loans The option of a commercial auto loan isn't the only option but it is a viable option. Three options will help you obtain the car your business needs. Small business loan If you are in need of additional cash flow, working capital small business loan could be the best option. However, they usually come with higher fees and interest rates that a conventional commercial auto loan. Personal loan isn't recommended to use a to finance a vehicle for business. These types of loans tend to be more costly than specific business loan options. Consumer auto loan If the car will be driven more for personal reasons and not for business, then an auto consumer loan might be a more suitable choice. They can be more easy to get, but you're putting your credit on the line instead of your company's. Lease: You might be in a position to lease a vehicle for your business rather than buy it. The car will not be a capital asset that your company can claim, but you can include the cost into your . It could also be less expensive in a month-to-month manner. The reason you shouldn't make use of a credit card Using a credit card, whether for business or not isn't an option for the most part. The high transaction costs make many retailers reluctant to let them. Credit cards are also expensive when compared to a loan. Rates are higher, both because of the nature the product, and also because the vehicle doesn't act as security. The bottom line Whether you're planning to finance a vehicle solely for your company or one that will also be used for personal reasons, take time to compare the various options available to you. With commercial auto loan interest rates beginning at less than 3 percent for those who have strong credit It's important to ensure you're getting the best price. Find out more
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The article was written by produced using automated technology, and thoroughly edited and fact-checked by an editor from our editorial staff. Editor: Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain confidence to take control of their finances with precise, well-studied information that breaks down complicated topics into digestible pieces.
Auto loans editor
Review by Mark Kantrowtiz by Nationally acknowledged Student Financial Aid expert Mark Kantrowitz is an expert on student financial aid including the FAFSA and scholarships, 529 plans as well as tax benefits for education as well as student loans.
Nationally anerkannt student financial aid expert
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