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 decisions by offering you interactive financial calculators and tools as well as publishing authentic and objective content through allowing you to conduct your own research and compare information for free - so that you can make financial decisions with confidence. Bankrate has partnerships with issuers, including but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Profit The deals that are advertised on this website are provided by companies that pay us. This compensation could affect how and where products are displayed on the site, such as such things as the sequence in which they be listed within the categories of listing and other categories, unless prohibited by law. Our loans, mortgages,, and other home lending products. However, this compensation will have no impact on the information we publish, or the reviews you read on this site. We do not cover the vast array of companies or financial deals that might be available to you. Thomas Barwick/Getty Images
3 min read Published 15th September, 2022
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Written by Bankrate This article was generated with the help of automation technology, and then verified 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 the end of 2021. They are passionate about helping readers gain the confidence to control their finances by providing precise, well-studied information that breaks down otherwise complicated subjects into bite-sized pieces. Review by Mark Kantrowtiz by Nationally acknowledged expert in student financial aid Mark Kantrowitz is an expert on student financial aid including the FAFSA and 529 plans, scholarships, tax benefits for education along with student loans. The Bankrate promises
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You have money questions. Bankrate has answers. Our experts have helped you understand your money for over four decades. We are constantly striving to give our customers the right guidance and the tools necessary to be successful throughout their financial journey. Bankrate follows a strict policy, which means you can be confident that our information is trustworthy and reliable. Our award-winning editors and reporters provide honest and trustworthy content that will help you make the right financial decisions. Our content produced by our editorial team is factual, accurate, and not influenced by our advertisers. We're transparent about the ways we're capable of bringing high-quality content, competitive rates, and helpful tools to our customers by explaining how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the placement of sponsored products or services, or through you clicking certain links posted on our site. So, this compensation can influence the manner, place and when products are listed in the event that they are not permitted by law. We also offer mortgage, home equity and other home loan products. Other factors, such as our own proprietary website rules and whether the product is offered in your area or at your own personal credit score may also influence how and where products appear on this website. While we strive to provide the most diverse selection of products, Bankrate does not include information about every credit or financial products or services. If you're planning to finance a vehicle to your business, an auto loan may be a good alternative. The loan is usually secured by the vehicle, meaning that the lender may take possession of the vehicle in the event that 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 business purposes -- and the loan conditions can differ based of the lender. What is an auto business loan? A business auto loan is a loan that can be used to finance the purchase of a car for business purposes. Just like a personal auto loan the car purchased can be utilized as security. Certain lenders might require that the vehicle is only used for business use and some require the borrower have a minimum credit score -- business, personal or both. The loan can also be personally guaranteed by the borrower, which means your personal possessions may be in danger in the event that the loan is not paid back. How to get a business auto loan If you want to get a business loan first, you'll need first make some preparations. Then, it's similar to getting a personal auto loan however there are a few additional specifications. Set a budget: Whether you're purchasing a new or used vehicle it is necessary to decide on the most you can afford to spend on a monthly basis. Determine how much you're willing to invest overall. Review your credit: Check your personal and business score and report to spot and correct any mistakes. It can take as long as thirty days to get a lender to respond, so do it well in advance of the time you plan to purchase. If you have a credit score that is good enough and your credit report fairly clean, you could be eligible for a lower rate. Choose a vehicle: Compare your options to choose the kind of car you'll be financing. Certain lenders will only lend on new cars for instance, while others may have tight restrictions on the used automobiles they lend. Get preapproved: Shop around with at least three to find out which one is willing to provide you with a business auto loan and what the terms. Some lenders might require you submit proof that you are the owner of the business. The documentation you provide will be required to supply your employer identification number, or Social Security number, business bank statements, tax returns as well as statements of profit and loss, cash flow statements and the balance sheet. You might also have to provide proving your personal income and creditworthiness. How do you get an auto loan for business loan If you are looking for auto loans for your small-scale business, you have three primary choices: banks, internet lenders, and alternative lenders. Banks that are traditional Traditional banks generally offer loans with low rate and flexible terms for repayment- however, they may be restricted on mileage or the vehicle's age. Auto loans for business loan rates can drop to less than 3 percent if getting funds via a bank. Bear in mind , the process can be lengthy and you'll have to submit many documents. Although they aren't as rigorous as banks however, they generally require a good FICO rating for business owners, and may have some restrictions on vehicles that can be financed. It may be easier to qualify, and the rates are usually comparable to a bank or credit union. Alternative lenders With other lenders you'll usually find interest rates that start at a bit higher. But there are usually looser limitations on mileage and age and the process can be much quicker. Alternatives to business auto loans The option of a company auto loan isn't the only option but it is a viable option. Here are three alternatives that could help you secure the vehicle you need for your business. Small business loan If you are in need of an alternative source of financing for your business, then a may be the best option. But often these come with greater fees and rates of interest than a traditional car loan. Personal loan isn't an ideal idea to borrow money to finance a business vehicle. These kinds of loans are usually more costly than those for business loan alternatives. Auto loan for consumers loan: If the vehicle is used for personal reasons and not for business, then a consumer auto loan could be a better option. They are easier to secure, but you're placing your personal credit on the line, instead of your company's. Leasing: You may be allowed to lease a car for your business rather than purchasing it. The car won't be a capital asset that your company can claim, however, you can integrate it into the costs of your . It might also be cheaper on a month-to-month basis. The reason you shouldn't make use of a credit card Using a credit card, business or otherwise, isn't a choice in the majority of cases. A high cost for transactions makes dealers reluctant to accept the use of credit cards. Credit cards can also be expensive compared to the cost of a loan. They are more expensive, both due to the nature of the product as well as since the vehicle isn't acting as security. It's all about the bottom line, whether you're looking to finance a vehicle solely for business use or one that can also be for personal use be sure to look over the different options you have. With business auto loan interest rates that start at 3 percent for borrowers with solid credit scores it's essential to make sure you get the best deal. Find out more
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The article was written by created using automated technology and was thoroughly checked for accuracy and quality by an editor from our editorial team. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to take control of their finances through providing precise, well-studied information that breaks down complex subjects into bite-sized pieces.
Auto loans editor
Review by Mark Kantrowtiz by Nationally known Student Financial Aid expert Mark Kantrowitz is an expert on student financial aid including the FAFSA, 529 plans, scholarships educational tax benefits, along with student loans.
Nationally anerkannt student financial aid expert
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