Business auto loans: What they are & how to get one Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to help you make better financial decisions by offering you interactive financial calculators and tools, publishing quality and impartial content by enabling you to conduct research and compare data for no cost and help you make sound financial decisions. Bankrate has partnerships with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The products that appear on this site come from companies that compensate us. This compensation could affect how and where products are displayed on the site, such as, for example, the order in which they appear within the listing categories in the event that they are not permitted by law for our loans, mortgages, and other products for home loans. This compensation, however, does affect the information we provide, or the reviews that appear on this website. We do not cover 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 Bankrate. This article was written using automation technology and 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 the end of 2021. They are dedicated to helping readers gain confidence to control their finances by providing concise, well-researched and well-informed facts that break down complex topics into manageable bites. Review by Mark Kantrowtiz by Nationally well-known student financial aid expert Mark Kantrowitz is an expert on student financial aid, the FAFSA and scholarships, 529 plans, tax benefits for education and student loans. The Bankrate guarantee
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We receive compensation for the promotion of sponsored goods or services, or by you clicking on certain hyperlinks on our website. So, this compensation can influence the manner, place and in what order products are listed and categories, unless it is prohibited by law for our loan products, such as mortgages and home equity, and other home loan products. Other elements, like our own website rules and whether the product is offered in your region or within your self-selected credit score range may also influence the way and place products are listed on this website. While we strive to provide a wide range offers, Bankrate does not include details about every financial or credit products or services. If you're planning to finance a car for your business, a business auto loan may be a good alternative. The loan is usually secured with the automobile, which means that the lender can the vehicle if they are unable to repay the loan is not paid back. Business auto loans can be used for financing the acquisition of brand new or used vehicle including those modified for your business purposes -- and the loan conditions will differ based on the lender. What is an auto business loan? A business loan is an loan that can be used to fund purchasing a car to be used for business. Similar to a personal auto loan the car purchased is used as security. Certain lenders might require that the vehicle is only used for business-related purposes and some require the applicant possess an acceptable credit scorewhether personal, business, or both. The loan could also be personal secured by the borrower meaning it is possible that personal belongings of the borrower may be in danger if it is not paid back. loan is not paid back. How do you get an auto loan for business loan If you want to get a business loan first, you'll need first make some preparations. From there, it's like getting a personal auto loan however with some additional requirements. Create a budget: If you're buying a new or used vehicle, you will need to figure out the amount you're willing to pay on an annual basis. You should also determine the amount you're willing spend in total. Examine your credit report: Review your business and personal credit scores and reports to find and correct any mistakes. It could take up to thirty days to get a creditor to reply, so make sure you do it in advance of the date you wish to purchase. If your credit score is good enough and your report is reasonably clean, you could be eligible for a lower rate. Select a car: Consider your options to decide on the kind of car you plan to finance. Some lenders may only lend on new cars for instance, while other lenders may place strict limits regarding the vehicles they finance. Be preapproved: Check with at minimum three lenders to determine which is willing to provide you with a business auto loan along with what its terms are. Certain lenders might require that you show 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, bank statements, business tax returns, the profit and loss statement along with cash flow statements and the balance sheet. You might also have to provide proving your creditworthiness and income. How do you get an auto loan for business loan When shopping for auto loans for your small-scale business, you have three primary options: banks, online lenders and alternative lenders. Traditional banks Traditional banks generally offer loans with affordable rates and flexible repayment termsHowever, they might be restricted on mileage or the vehicle's age. Business auto loan interest rates can fall to less than 3 percent if accessing funding through banks. Keep in mind that the process may be long and you'll need to provide lots of documentation. 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 loaned. You may find it easier to get approved, and the interest rate ranges are often comparable to banks and credit union. Alternative lenders With alternative lenders, you'll usually notice interest rates begin a little higher. But there are usually looser limits on mileage and age as well as the process is much quicker. Alternatives to business auto loans The option of a commercial auto loan isn't the only option, though. Here are three alternatives that will help you obtain the car your business needs. Small business loan If you are in need of another type of working capital, a may be a better option. But often these come with greater fees and rates of interest as compared to a traditional car loan. Personal loan is not a great idea to borrow money to finance a business vehicle. These kinds of loans are usually more costly than business-specific loan alternatives. Consumer auto loan: If the vehicle is used for personal use then a consumer auto loan might be a more suitable alternative. They are easier to secure, but you put your personal credit on the line, not your business's. Lease: You might be allowed to lease a car for your company rather than purchase it. The car will not be a capital asset that your company could claim, however there are ways to incorporate it into the costs of your . It could be less costly in a month-to-month manner. The reason you shouldn't make use of a credit card Using a credit card, for business or otherwise, isn't a choice in the majority of cases. High transaction fees make most retailers reluctant to let the use of credit cards. Credit cards are also expensive in comparison to the cost of a loan. The rates are higher because of the nature the product, and also since the vehicle isn't acting as security. The main point is that whether you're looking to finance a car solely for your company or one that will also be used for personal purposes be sure to look over the options available to you. With the business automobile loan interest rates starting under 3 percent for those who have good credit scores it's essential to make sure you're getting the best price. Learn more
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Written by This article was generated using automation technology and thoroughly edited and fact-checked by an editor from our editorial team. 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 manage their finances with clear, well-researched information that dissects complex topics into manageable bites.
Auto loans editor
Reviewed by Mark K. Kantrowitz Reviewed by Nationally known Student Financial Aid expert Mark Kantrowitz is an expert on student financial aid and the FAFSA, 529 plans, scholarships as well as tax benefits for education as well as student loans.
Nationally recognized student financial aid expert
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