The business auto loan comes with a built-in parallel: the car itself. This means that they may cost less or be easier to qualify than other loans and depending on the lender, you do not have to provide a personal guarantee to secure the loan.
You can use other small business loans to finance a car, so compare options to find the one that works best for you. Here lenders offer business auto loans and how decide if it makes sense for you.
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What is a Business Auto Loan?
A business auto loan – sometimes called a commercial auto loan – is financing you can use.
Buy a car for your company. These loans usually cover cars, vans, and some trucks. For a heavy-duty car, you will need an equipment loan or a commercial truck loan.
Business auto loans are just like personal auto loans: you get interested within a certain period for buying a car and repaying it. But there are some significant differences:
Vehicles for commercial purposes: The personal and professional lives of small business owners are often obscure, but for use by commercial auto loan companies. When you apply, the lender will ask you how to use the car and you may need to provide documents such as a business plan or company financial statement.
The vehicle may be in the name of your business: For eligible borrowers, some lenders will only allow you to make business auto loans in the name of your company. If your business is unable to repay the loan, it may protect your credit or assets. In other cases, you will need to provide a personal guarantee as collateral for the loan.
Possible tax exemptions are available. If you purchase or lease a commercial vehicle, you can deduct its ownership and operating costs. Owners can also deduct car depreciation. There are several ways to do this; Section 179 of the Tax Code allows for a complete deduction at once, although the amount varies depending on the type of vehicle.
How to get a Business Auto Loan
Find the right vehicle: This means that not only the type of vehicle will suit your business needs, but also a lender will approve. For example, if you want to finance a used car, many lenders will have a fixed mileage limit and will not approve a car older than five years due to undervaluation.
Compare offers: If your company has a relationship with a financial institution, it is understandable to see if it offers commercial auto loans. But like any other type of business loan, you can pay less by shopping. See a lender’s APR and details to see how much you can afford. If it’s less than 100% of the total cost of the car – don’t forget the costs like taxes and registration – you will need more cash.
Apply with the lender: Lenders will have a different application process. The process can be time-consuming and requires documentation such as a business license, business tax ID, and all business owner information. If you are in a hurry, alternative lenders may offer a more flexible application process, but may also offer more expensive loans.
Business Auto Loan Bank of America
The annual percentage rate for Bank of America Business Advantage Auto Loan, or APR, starts at 2.99%. Loans range from $ 10,000 to $ 100,000 and can be used to purchase or refinance cars, vans, or light trucks.
If you still can’t find the right car, Bank of America locks up your business auto loan rate offer for 30 days. This gives you time to shop before raising a loan.
Ally Bank Business Auto Loan
Ally Bank offers several commercial auto funding options, including specific loans for heavy-duty trucks and vehicle changes, such as the addition of towing equipment.
If you are looking for a conventional vehicle like a passenger car, you can buy or lease one through an approved vehicle. The lease may end in open or closed. This option will determine how much you pay at the end of the lease, giving you some flexibility with future costs.
If you qualify, Affiliates offers business-name-only financing. This means that you cannot be personally liable for an auto loan in case of non-payment.
Wells Fargo Appliance Express loan
Wells Fargo has temporarily suspended its Appliance Express loan program to focus on paycheck protection program loans.
The Equipment Express loan allows you to finance or refinance trucks and trailers as well as passenger vehicles with a fixed rate ranging from 4.50% to $ 10,000 to $ 100,000. If you need a heavy-duty vehicle, Wells Fargo offers half-truck financing through a separate commercial loan program.
Wells Fargo does not charge a documentation fee for its Equipment Express loan but sees APR when comparing business loan rates. This includes interest and fees, so you can say which business auto loan is the least expensive overall. Capital One Business Auto Loan
Capital One Business Auto Loan offers funding starting at 10,000. Its repayment term is five years. This is less than other bank auto loans; Bank of America and Wells Fargo each offer 72-month terms. However, NerdWallet recommends avoiding car loans for more than 60 months.
You must have or open a business checking account to qualify for a Capital One business auto loan. Other lenders may require less business time for automated lending.
Capital One Business Auto Loan
Capital One Business Auto Loan offers funding starting at 10,000. Its repayment term is five years. This is less than other bank auto loans; Bank of America and Wells Fargo each offer 72-month terms. However, NerdWallet recommends avoiding car loans for more than 60 months.
You must have or open a business checking account to qualify for a Capital One business auto loan. Your business for at least two years. Other lenders may require less business time for automated lending.
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