Businesses today rely on company vehicles and reliable transportation. Your bank or financial institution may qualify you for a business loan for a car. We’ll take a closer look at how business loans can cut down on the headaches of financing a vehicle.
Business loans for a car can be affordable regardless of the vehicle type. If your business already has a vehicle finance option, refinancing is simpler than ever. A car finance and loan company may be suitable for your business.
There are a few things to evaluate when looking at commercial auto loans, including:
● How commercial auto loans work
● Repayment of a business loan for a car
● Alternative options to business loans for a car
● Where to begin looking for financing
Understanding commercial auto loans can be quick and painless. So let’s dig into the nuts and bolts of an increasingly popular financing option for businesses.
How Commercial Auto Loans Work
As many people know, businesses often need a vehicle for their regular operations. Performing services to the highest standard, moving personnel, and transporting equipment are among the priorities of business owners.
So, how do business loans for a car work to aid businesses? Banks, credit unions, and even a car finance and loan company can make financing a reality. New loans can become available by providing collateral in the form of the car itself. Of course, you will also need to prove your company ownership.
These loans are similar to consumer auto loans, with more recordkeeping and documentation. Each loan needs to fit the budget and planning of the business. This cost includes the recurring monthly payments for the vehicle, a down payment, any insurance, taxes, and registration.
Qualifying for a business loan for a car means your business and personal credit must be in good shape. A requirement may include any legal judgments, credit files, or tax liens from your company. This qualification stage can set you up for the best rates and terms of repayment of your loan.
Repayment of a Business Loan for a Car
You may not have a requirement to provide a personal guarantee if you default. However, you might be on the hook for a business plan which shows why you need a company car and your goals for repayment of your business loan.
In some cases, a personal guarantee is a standard. So if your business defaults on repayment, you are responsible for making the lender whole. The use of personal assets can reduce the impact on your business credit for the default.
However, before you get to that point, budgeting can help repay a business loan for a car. Pay close attention to repayment terms, especially for vehicles five years or older.
Lenders may not finance 100% of the vehicle since an automobile loses value over time. The terms of repayment are typically longer with buying versus leasing. This difference depends on market conditions and the lender you choose.
Some business owners consider other paths to operating a company vehicle. Here we’ll unwrap some of those alternative options.
Alternative Options to Business Loans for a Car
There are alternative options to secure financing for a car for your business. Commercial leasing is just one option that is working for many.
A commercial lease is flexible for an automobile which can entice business owners. However, while some commercial auto loans allow personal and business use for a vehicle, many leasing options do not. Those leases require a business use only for the car.
A benefit of the leasing option is how a newer vehicle model can become available quickly. Restrictions to observe are set by the lease terms and can cover usage, mileage, and more.
Beyond the lease option are some small business loans that potential borrowers can use for a car purchase. Again, creditworthiness is a crucial factor of these loans, even while not requiring collateral in some cases. In addition, knowing that interest rates are higher may encourage a business owner to pay down a small business loan sooner.
The persistent question is where to begin the hunt for a commercial auto loan.
Where to Begin Looking for Commercial Auto Financing
Consider your existing bank or credit union for commercial auto loans. A team that knows the challenges you face can help you be successful.
Small Business Bank allows you to connect with a team of professionals who understand. The team at SBB connects with business owners of large, medium, and small enterprises.
The team can help you determine what financing options best fit your revenue profile and how likely you are to qualify. In addition, your business history can be a helping factor in aligning your needs with commercial auto financing tools that best fit.
Talk with the team to find out how they handle application fees, loan rates, and approvals. A relationship with Small Business Bank can bring you the comfort of a small business with the capability of a larger financial institution.
Go online today to uncover how professionalism and experience from Small Business Bank can improve your business.