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 providing you with interactive tools and financial calculators, publishing quality and impartial content by allowing you to conduct your own research and compare information for free and help you make informed financial decisions. Bankrate has partnerships with issuers, including but not restricted 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 could affect how and where products are displayed 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. Our mortgage, home equity and other home lending products. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not cover the universe of companies or financial offers that may be available to you. Thomas Barwick/Getty Images
3 min read published September 15, 2022
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Written by Bankrate Written by The article was created with the help of automation technology, and then checked and edited by an editor from our editorial staff. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to manage their finances by providing precise, well-studied information that breaks down complicated topics into digestible pieces. Reviewed by Mark Kantrowtiz Reviewed by Nationally acknowledged expert in student financial aid Mark Kantrowitz is an expert on student financial aid, the FAFSA, 529 plans, scholarships, education tax benefits as well as student loans. The Bankrate guarantee
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They ensure that what we write is objective, accurate and reliable. Our loans reporters and editors focus on the points consumers care about the most -- various types of loans available, the best rates, the best lenders, how to repay debt, and many more. This means you can feel confident when making a decision about your investment. Editorial integrity
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You have money questions. Bankrate has the answers. Our experts have been helping you manage your finances for more than four decades. We strive to continuously provide our readers with the professional guidance and the tools necessary to be successful throughout their financial journey. Bankrate adheres to strict standards policy, which means you can be confident that our content is honest and precise. Our award-winning editors, reporters and editors provide honest and trustworthy content to help you make the right financial decisions. Our content produced by our editorial staff is factual, objective and uninfluenced through our sponsors. We're open regarding how we're capable of bringing high-quality content, competitive rates and useful tools to you by explaining how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the placement of sponsored products andservices or by you clicking on certain hyperlinks on our site. This compensation could influence the manner, place and when products appear within listing categories and categories, unless it is prohibited by law for our mortgage, home equity and other products for home loans. Other factors, like our own website rules and whether a product is available in the area you reside in or is within your personal credit score could also affect the manner in which products are featured on this website. While we strive to provide an array of offers, Bankrate does not include specific information on every financial or credit products or services. If you're looking to finance a car for your business, an auto loan might be a great option. The loan is typically collateralized through the car, which implies that the lender may take possession of the vehicle in the event that they are unable to repay the loan is not repaid. Business auto loans may be used for financing the acquisition of new or used car -- including those modified for your business purposes -- and the loan terms will vary depending upon the lender. What is a business auto loan? A business auto loan is an loan that can be used to fund an acquisition of a vehicle for business purposes. Just like a personal auto loan, the vehicle bought can be secured. Some lenders may require the vehicle is only used for business use, and many require that the applicant possess a minimum credit score -whether personal, business, or both. The loan may also be personally guaranteed by the borrower, meaning your personal possessions could be at risk in the event that they fail to repay the loan is not paid back. How to get an auto loan for business loan To get a business loan, you'll need to first do some planning. Then, it's similar to obtaining a personal auto loan -- though with some additional conditions. Make a budget: Whether you're purchasing a brand new or used vehicle it is necessary to determine the maximum amount you can afford to spend on an annual basis. You should also determine the amount you're willing to invest overall. Review your credit: Check your business and personal ratings and credit reports in order to find and rectify any errors. It can take as long as thirty days to get a lender to respond, so be sure to 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 decide on the type of vehicle you'll be financing. Certain lenders will only lend on new cars, for example, while others may have tight restrictions on the used vehicles they finance. Find pre-approved lenders: Compare with at minimum three lenders to determine which is willing to offer you an auto for business loan as well as what their terms are. Some lenders might require you provide documentation proving you own the business. The documentation you provide will have to give your employer identification number or social Security number, your business bank statements, tax returns as well as statements of profit and loss along with cash flow statements and an account balance sheet. It is also possible to provide proving your creditworthiness and income. How do you get an auto business loan When looking for auto loans to help your small business, you have three primary options: banks, online lenders and alternative lenders. Banks that are traditional Traditional banks typically offer loans with affordable interest rates as well as flexible payment terms -- however, they may limit mileage and the age of your vehicle. Auto loans for business loan rates can drop below 3 percent if you're getting funds through banks. Be aware that the process can be lengthy and you'll need to provide lots of documentation. Online lenders While not as strict as bank lenders However, they do require a minimum FICO credit score for the business owner, and may have some limitations on the vehicles that can be purchased. You may find it easier to qualify, and the rates are usually comparable to a bank and credit union. Alternative lenders When you choose to use other lenders you'll typically notice interest rates begin slightly higher. However, they usually have less limits on mileage and age as well as the process is significantly faster. Other alternatives to corporate auto loans A company auto loan isn't the only choice however. Three options can help you get the vehicle your business requires. Small business loan: If you need additional cash flow, working capital small-business loan may be the best option. However, these loans typically have more fees and higher interest rates that a conventional business auto loan. Personal loan: It's not recommended to make use of a personal loan to finance a company vehicle. These types of loans are usually more costly than business-specific loan options. Consumer auto loan: If your vehicle is used for personal use, the consumer auto loan may be a better option. They are easier to secure, but you put your personal credit at risk, rather than your business's. Leasing: You may be able to lease a car for your business rather than buy it. The car won't be a capital asset that your company can claim, however, you can include costs into . It may also be less expensive in a month-to-month manner. The reason you shouldn't make use of credit cards. Using a credit card, whether for business or not, isn't a choice for the most part. The high transaction costs make many dealers reluctant to accept the use of credit cards. Credit cards are also expensive in comparison to the cost of a loan. Rates are higher, both due to the nature of the product as well as because the vehicle does not function as security. The bottom line Whether you're looking to finance a car solely for business use or one that will also be used for personal purposes, take time to compare the different options you have. With the business auto loan interest rates starting under 3 percent for those with strong credit it's essential to make sure you get the best deal. Learn more
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Written by The article was produced using automated technology, and thoroughly edited and fact-checked by an editor on our editorial staff. Editor: Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers gain the confidence to control their finances with clear, well-researched information that breaks down otherwise complicated topics into digestible pieces.
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Review by Mark Kantrowtiz by Nationally known experts on student aid Mark Kantrowitz is an expert on student financial aid, the FAFSA and scholarships, 529 plans educational tax benefits, along with student loans.
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