Generally speaking, most people, especially small business owners, do not purchase a commercial car outright, as financing is a more feasible option. Personal and business car financing are quite similar in the sense that finance options do not differ much in either sector. You can purchase the car with the help of credit, or deals offered by manufacturers. However, the market share does differ.
Additionally, commercial vehicle loans usually have higher interest rates compared to consumer auto loans. In most cases, the deals for business purposes are better, which makes up for higher interest rates. Here is the list of ways how to buy a car under your business name.
Business Loan
Applying for a business loan is more complicated than applying for a personal auto loan. Credit lenders examine both your business and personal credit and require a host of business and personal documents. On the top of that, there are various factors which influence the bank’s decision to lend you money, so it is highly important to build your business credit.
Once you build your business credit and once you are certain the bank will not turn down your credit request, prepare a loan proposal. The loan proposal should include the amount of money you want to borrow, the amount of money for a down payment and the collateral you can offer.
Everything we have said about banks can be applied to credit unions. In both cases, the benefits are competitive rates and personal service. However, the whole process lasts longer than with other options.
Manufacturers’ Deals
Certain manufacturers, such as Ford and Toyota, offer special funding deals for businesses. Some of the documents needed for this kind of financing include federal tax ID, previous two year-end financial statements, current YTD balance sheet and profit/loss statement and full copies of corporate authority.
The advantage of financing deals offered by manufacturers is that you can get low financing rates. However, the main disadvantage is that these deals can be used usually by the business with excellent credit scores.
Online Business Car Loans
Finding online business car loans is not only cost-effective, but it opens up more possibilities compared to traditional financing. Another advantage of this type of financing is that loan decisions are made more quickly and funds are available faster. As with any business loan, you should have an established history of profit, a minimum of 2 years and you should provide at least 2 years of tax returns.
Auctions
Buying a commercial car in auction houses may not be the first thing that crosses your mind when you think about financing options, but you should consider it, especially if you are looking for profitable car sales. In addition, certain auction houses offer online bidding, which saves your time considerably.
General Tips
Work with trusted companies, which are familiar with commercial lending. Compare different lenders based on interest rates, their requirements in terms of credit and business history and their offers. Make sure you understand commercial vehicle coverage policies since they are much higher than personal car insurance policies. Bear in mind that you can save additional money on commercial vehicles. Research your options before you start looking for cars.
As you can see, the extensive research is pretty much necessary. Visit commercial vehicle dealers online, as well as companies offering loans. Depending on the minimum and maximum loan amounts you can find online, you should find the financing option matching your current and future needs.