Business Auto Loan: A Complete Guide
A business auto loan can help you grow your fleets, finance vehicles, or diversify your investment portfolios.
We put together this comprehensive guide so you understand your available financing options and make an informed decision about what works best for you and your company.
Best Business Auto Loans
Camino Financial’s lending requirements are less strict than those of traditional providers. While not an auto loan, you can use our loans to purchase commercial vehicles because they’re considered business equipment.
Because it’s a small business loan and not an auto loan, we don’t require down payments.
- Loan amount: $5,100 to $35,000
- Terms: 24 to 36 months
- Payment frequency: Monthly
- Annual interest rate: 31.55% to 57%
- Type of rate: Fixed
- Origination fee: 6.99%
- Requirements: be active and registered for at least nine months and generate sales of $30,000 annually or $2,500 monthly (among other conditions)
Wells Fargo offers flexible financing and is a great option for those looking to easily manage their loans.
- Loan amount: $10,000 to $100,000
- Terms: up to 84 months
- APR: as low as 6.25%
- Fees: $150 documentation fee
- Requirements: Vehicle age limit of 10 years old (among other conditions)
U.S. Bank may be the ideal lender for the Midwest or the western U.S. It’s important to note, however, that U.S. Bank requires a higher credit score than others on this list.
- Loan amount: up to $250,000
- Terms: up to 84 months
- APR: up to 11% based on a 5-year term
- Requirements: Credit score of 680 and at least two years in business (among other conditions)
Bank Of America
Bank of America offers a low starting APR and more flexible qualifications than some other lenders. As with most loans, though, there is a limit on qualifying vehicles. They have a mileage limit of up to 75,000 miles and a vehicle age limit of 5 years old.
- Loan amount: starting at $10,000
- Terms: four to six years
- APR: starting at 2.49%
- Requirements: qualified vehicle sellers with free-and-clear titles (among other conditions)
Crest Capital allows companies to quickly and easily check their eligibility, which is critical for those wanting to jump right into the process. Best of all, you can receive the financing for your commercial vehicles in as little as four hours for amounts under $250,000.
- Loan amount: up to $1 million
- Terms: 2 to 6 years
- APR: 5 to 10%,
- Fees: a first month’s down payment and an administrative fee
- Requirements: Credit score of 650 and at least 2 years in business (among other conditions)
PNC Bank, with headquarters in Pittsburgh, serves 27 states. Their loans for commercial vehicles can be a good choice for organizations operating on the East Coast. To qualify, applicants must have been in business for three years or more.
- Loan amount: $10,000 to $250,000
- Terms: up to 6 years
- APR: 4.55 to 15%
- Requirements: credit score of 670 and at least three years in business (among other conditions)
What Are Business Loans For Cars?
They are affordable financial products specifically for businesses and companies. They allow them to buy vehicles (from cars to trucks and everything in between) for commercial purposes only.
They usually have lower rates than other types of loans.
How Small Business Auto Loans Work
Applicants use the vehicle purchased with these loans for business purposes and can often write it off as an operating expense on taxes.
Loan terms, rates, and business car loan requirements vary per lender.
The lender decides on the interest rates considering factors such as the borrower’s credit history, monthly income, and loan length.
One lender may finance 100% of the vehicle’s retail value, while another might require a specific down payment based on the business’s credit and financial histories.
These loans are usually self-secured, meaning the purchased vehicle is the collateral. If the business owner fails to make payments, they will likely lose ownership rights to their vehicle.
Applicants usually repay business auto loans in regular installments over an agreed-upon timeframe — generally 36 to 72 months. The payments include the principal, interest, and fees.
Keep in mind that auto lenders may require the vehicle to have a minimum value, age, weight, and mileage.
Also, business auto loan proceeds are only to purchase a vehicle or refinance one for work-related activities such as transporting equipment, visiting clients, using the car to complete a specific task, and other uses.
In contrast, business lenders like Camino Financial don’t have such requirements.
Benefits Of Getting An Auto Loan For Business
- Tax deductions. Business owners can reduce their tax liability by taking allowable business-related auto tax deductions.
- Business growth. You can use vehicles for travel, selling/delivering your products and services, and numerous other uses.
- Lower Interest Rates. They typically offer lower interest rates than other types of loans because the lender is confident in their security – the vehicle – and the borrower’s ability to make payments.
Who Should Get Business Auto Loans?
Many businesses can use auto loans to fund their specific needs. Here are some examples:
- Business Owners. Business owners can use pickup trucks, cars, vans, and other vehicles for different commercial purposes.
- Personal Drivers. Caterers, florists, and bakeries can purchase a vehicle to make deliveries.
- Startup Transport Business. With a truck or auto, you can transport people or goods.
- Trucking Companies. With commercial truck loans, you could invest in a heavy truck to pull a flatbed or a refrigerated container to transfer food products.
- Owner-Operators. Rather than stay an employee, you can purchase your own rig and become your own boss.
- Tow Truck Services. Many tow truck owners get paid by insurance companies to provide this service, but they need the correct vehicles. A loan can give you the capital needed to buy them.
- Food Truck Companies. A well-planned food truck is the mainstay of a mobile food business.
- Car Rental Companies. To meet public demand, car rental businesses need small and larger vehicles with a variety of features to suit preferences.
- Moving Companies. You may need several trucks to accommodate small or large moves and get more clients.
- Taxicab Companies. You can start your own taxi company by buying a car or investing in a larger fleet to expand your operations.
- Limousine Operators. You may want to purchase a newer stretch limo to accommodate weddings, parties, and other social event participants.
How To Apply For Business Vehicle Finance
Once you set a budget, review your personal and business credit, and choose the type of vehicle you want, compare different lenders (decide if you want traditional or alternative auto lending).
To increase your chance of receiving a commercial vehicle loan, ensure that you meet the requirements set forth by your preferred lender.
This may include::
- having a good credit score
- being able to make a down payment
- having the capacity to make regular payments
Then, complete the lender’s business vehicle loan application, providing all requested documents and information accurately.
The necessary documentation may include:
- proof of income (bank statements)
- proof of insurance
- valid ID, like a driver’s license
- other financial documents
When you submit your application, lenders will review it to determine if they can approve you for financing. If approved, you’ll receive any necessary paperwork to sign
Ensure that you read through the loan agreement carefully to understand all loan terms and conditions before signing it. Afterward, they’ll deposit the money and you’ll be able to purchase your vehicle.
How Much Can You Afford? Use Our Commercial Loan Calculator
If you don’t know how much your business can afford, you are welcome to use our loan calculator.
Enter how much you want to borrow and your preferred terms to get the approximate APR for your loan. Keep imputing data to come up with a payment amount that your business can repay comfortably.
Most Common Business Auto Financing Investments
Improve Your Current Company Car
A pickup truck may have sufficient space to pick up supplies or make deliveries until your business expands and you need more space.
Then you’ll need a larger vehicle.
Purchase A Company Car
A company car is a business asset, and you can deduct the depreciation, interest paid, insurance, and auto repair and maintenance costs as business expenses.
That’s why it’s a great idea to buy one.
Buy A Fleet Of Vehicles
As your business grows, you may need more vehicles with special features to conduct your operations.
Buying a new fleet of vehicles for a small business with a loan is the ideal solution to support your business’s growth.
Refinance An Existing Vehicle
Auto loans for business owners are an economical way to reduce your current payment on a vehicle you currently own.
It also allows you to increase your business’s cash flow.
Lease A Business Car
Depending on the commercial car distributor, they cover repairs of leased vehicles, so you don’t have to worry about maintenance bills.
For the most part, auto lease payments are normally lower than buying a vehicle, and the payments are a business expense.
Buy A Commercial Truck
These trucks are convenient for loading, unloading, and picking up merchandise to save you time and money.
Because they’re bigger, you can haul more and take the same tax deductions you do for a smaller truck.
Business Auto Loan Financing vs. Business Auto Lease
- When you purchase a vehicle and make payments, it’s yours until you sell or trade it.
- With a lease, you still make payments, but you don’t own the car.
A car loan for business is usually better than getting a lease because you can drive as many miles as you want.
With leasing, most lenders restrict the borrower on how many miles they can drive. They pay from $.15 to $.30 for each mile that exceeds the maximum allowable miles.
With an auto loan, you can make improvements, but with a lease, a borrower pays fees and faces termination of the agreement if they change the car’s appearance.
Plus, business loan interest rates are very competitive and can be cheaper than a lease in the long run.
Camino Financial Is Your Best Bet
Alternative lenders provide loans to consumers who are usually denied by traditional sources. Their products have often more flexible requirements than traditional auto loans, as well as lower down payments and longer loan terms.
This means that those applicants with lower incomes, no existing credit histories, or other financial challenges can still take advantage of the great deals available in the auto market.
Alternative auto loans also offer lower interest rates than traditional lenders (like banks), making them a great option for anyone looking to save money on their loan repayment.
Camino Financial is an alternative lender that offers small business loans up to $35,000.
Our Business Loan Requirements
Camino Financial is a suitable financing option for numerous types of businesses because our business loan requirements are less strict than traditional business auto loan providers.
To qualify for small business loans through Camino Financial, your business should:
- Be registered and in operation for at least 9 months
- Businesses earning $2,500 in average monthly revenue (or $30,000 per year)
- Located in the U.S., except for New Jersey, Hawaii, and Puerto Rico
- If you don’t have an SSN, you can apply with your ITIN
How To Apply With Camino Financial
Fill Out And Submit The Application
Our 10-minute online loan application is simple and requires basic personal and business information.
Plus, it doesn’t affect your credit score.
Wait To Hear From Us
Just send us the requested documents, such as business financial statements.
We have safe systems in place that allow us to keep your data private and secure.
Accept The Final Loan Terms
Once we approve the loan, we send an electronic copy of the loan agreement for you to review and return.
Receive The Loan Proceeds
On average, we deposit money into your business bank account within 2 business days. The process may differ slightly based on which loan you qualify for.
How do I finance a car through my business?
Take into account that some California finance lender loans will ask you for a personal guarantee or having a business checking account; pay attention to the requirements, and choose the best suits your needs.
Once you choose the best, complete an application and submit the information the lender requires. If you meet the specific lender requirements, you should receive approval.
Does a business auto loan show up on personal credit?
If you purchased an auto loan using your business credit and history, the lender reports your payment to one or all three of the major credit bureaus.
If you signed a personal guarantee, it may show up on your personal credit history should you miss a payment.
What business credit score do you need to buy a car?
It depends on the lender; some business vehicle loans ask for a business score ranging from 0 to 100. A score over 80 is what lenders like to see.
Can you use a business line of credit to buy a car?
Check with your lender first to verify that there are no restrictions on using the funds. However, your line of credit must be large enough to cover the purchase price of the car with a balance left over to cover unexpected expenses.
If you can’t pay off the balance each month, you pay interest on the amount owed.
Can I get an auto loan for my small business?
As long as your business meets the lender requirements for a business auto loan, you should qualify.
How do I get a car with business credit?
Your business financial and credit histories must indicate that you can make monthly payments and repay the loan.
What banks finance commercial vehicles?
Loans are available from traditional banks (both online and in-person) and online lenders. And if you are asking for business car loans for a startup, the process should be the same.
What are the differences between a consumer auto loan and a commercial auto loan?
Do personal auto loans allow the purchase of commercial vehicles?
Yes. However, it is important to understand the difference between them.
Generally speaking, interest rates on commercial vehicle loans tend to be higher than those offered on personal auto loan products as they come with additional risks related to the business aspect of the transaction.
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