Business auto loans: What they are & how to get one Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by providing you with interactive financial calculators and tools that provide original and objective content, through allowing users to conduct research and compare data for no cost - so that you can make financial decisions with confidence. Bankrate has agreements 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 who pay us. This compensation can affect the way and when products are featured on the site, such as such things as the order in which they may appear in the listing categories and other categories, unless prohibited by law. This applies to our mortgage, home equity and other home loan products. But this compensation does affect the information we provide, or the reviews you see on this site. We do not include the universe 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 The article was created by using automated technology. It was then thoroughly verified and edited by an editor from our editorial staff. The article was edited 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 take control of their finances. They provide concise, well-researched and well-informed facts that break down complex topics into manageable bites. Reviewed by Mark Kantrowtiz Reviewed by Nationally recognized expert on student financial aid Mark Kantrowitz is an expert on student financial aid including the FAFSA, scholarships, 529 plans, education tax benefits as well as student loans. The Bankrate promise
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They ensure that what we write ensures that everything we publish is accurate, objective and reliable. We have loans reporter and editor focus on the areas that consumers are concerned about the most -- different kinds of lending options, the best rates, the best lenders, the best ways to pay off debt and much more. So you'll feel safe investing your money. Integrity of the editing
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If you have questions about money. Bankrate has answers. Our experts have been helping you manage your finances for over four years. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life's financial journey. Bankrate follows a strict standard of conduct, which means that you can be sure that our content is honest and precise. Our award-winning editors and reporters produce honest and reliable content to help you make the right financial decisions. Our content produced by our editorial staff is factual, accurate and uninfluenced through our sponsors. We're open regarding how we're capable of bringing high-quality content, competitive rates and useful tools for you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products or services, or through you clicking specific links on our site. So, this compensation can impact how, where and in what order products are listed and categories, unless it is prohibited by law. We also offer mortgage, home equity, and other home loan products. Other factors, such as our own website rules and whether a product is offered in your area or at your self-selected credit score range can also impact the manner in which products are featured on this website. Although we try to offer an array of offers, Bankrate does not include information about every credit or financial products or services. If you're planning to finance a vehicle for your company, then a business auto loan might be a great alternative. The loan is usually secured through the car, which implies that the lender could take over the vehicle if the loan is not paid back. Business auto loans are a great way for financing the acquisition of new or used car -- even those that have been modified for purpose for business. the loan conditions can differ based on the lender. What is a business auto loan? A business loan is an loan which can be used to finance purchasing a car to be used for business. Like a personal car loan the car purchased can be secured. Certain lenders might require that the vehicle is only used for business-related purposes as well as requiring that the buyer must have at least a certain credit score- business, personal or both. The loan could also be personal guaranteed by the borrower, this means your personal possessions might be in danger if they fail to repay the loan is not paid back. What are the steps to obtain a business auto loan To get a business loan first, you'll need first do some planning. Then, it's similar to obtaining an individual auto loan however with a few more specifications. Make a budget: Whether you're purchasing a brand new or used car it is necessary to figure out the amount you're willing to pay on the basis of a monthly basis. Also determine how much you're willing to spend overall. Review your credit: Check your business and personal ratings and credit reports in order to spot and correct any mistakes. It can take as long as 30 days for the creditor to respond, so do it well in advance of the date you wish to purchase. If your credit score is good enough and your credit report reasonably clean, you could qualify for a lower interest rate. Select a vehicle: Look through your options to decide on what kind of vehicle you'll be financing. Some lenders may only finance new vehicles like this, but others might have strict restrictions regarding the automobiles they lend. Find pre-approved lenders: Compare with at least three to find out which one is willing to give you a business auto loan along with what its terms. Some lenders might require you provide documentation proving you own the company. Provide documentation: You will need to provide an employer ID number or Social Security number, bank statements, tax returns, statements of profit and loss as well as cash flow statements, and an account balance sheet. You might also have to provide proving your creditworthiness and income. Where to get an auto business loan If you are looking for auto loans for your small company, there are three primary options: banks, online lenders, and alternative lenders. Banks that are traditional Traditional banks usually provide loans with low interest rates as well as flexible payment termsHowever, they might limit mileage and the vehicle's age. Business auto loan rates can drop to less than 3 percent if getting funds via a bank. Bear in mind , the process may be long and you'll have to submit a lot of paperwork. Online lenders While not as rigorous as banks However, they do require at least a good FICO rating for the business owner as well as having some restrictions on vehicles that can be purchased. It may be easier to get approved, and the rates are usually comparable to a bank and credit union. Alternative lenders With other lenders you'll generally find interest rates that start at a bit higher. However, there are generally less restrictions on age and mileage as well as the process is much quicker. Other alternatives to corporate auto loans A business auto loan isn't the only option however. Three options can help you get the vehicle you need for your business. Small business loan If you require another type of financing for your business, then a may be a better option. However, they usually come with higher fees and interest rates as compared to a traditional business auto loan. Personal loan isn't recommended to use a to finance a business vehicle. These kinds of loans are typically more expensive than business-specific loan alternatives. Auto loan for consumers loan: If your vehicle will be driven more to be used for personal purposes, an auto consumer loan could be a better alternative. They can be more easy to secure, but you put your personal credit at risk, rather than your business's. Lease: You might be able to lease a car for your company rather than purchase it. It won't be an asset that your business can claim, but you can integrate it into the costs of your . It may be less costly on a month-to-month basis. The reason you shouldn't make use of a credit card making use of a credit card whether for business or not isn't the best option generally. A high cost for transactions makes retailers reluctant to let them. Credit cards are also expensive compared to the cost of a loan. They are more expensive, both because of the nature the product, and also because the vehicle does not function as security. The bottom line Whether you're seeking to finance a vehicle solely for your company or be for personal use make sure you compare the various options available to you. With commercial auto loan interest rates beginning at less than 3 percent for those who have good credit scores, it's worth making sure you're getting the best price. Learn more
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The article was written by created using automated technology and thoroughly edited and fact-checked by an editor from our editorial team. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to manage their finances with concise, well-researched and well-read 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, the FAFSA, 529 plans, scholarships educational tax benefits, and student loans.
Nationally acknowledged expert in student financial aid
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