Getting a business car loan has many advantages for your small business. It may also be a superior alternative for accumulating equity and taking benefit of tax advantages. When buying a business car outright, however, it can be challenging on your cash flow, so a business car loan may be a better option.
What Is The Difference Between a Commercial Vehicle Loan and a Personal Vehicle Loan?
A commercial vehicle loan is a type of finance explicitly designed to purchase vehicles for your company or for business use. One of the significant advantages of taking out a commercial car loan is that you won’t have to utilize your company’s cash reserves to pay for the vehicle upfront.
You can repay the business vehicle loan in monthly payments of the principal amount, plus interest, just as you would with a personal vehicle loan. The average period for a commercial auto loan is normally five years. However, this can vary depending on the age of the vehicle you are wanting to finance.
Will I Be The One To Drive The Commercial Vehicle?
The title to the car will be transferred to you unencumbered once you have paid off the entire balance of your business car loan within the agreed-upon loan term. You will then gain clear title of the car. You can keep it as an asset for your company, trade it for another vehicle, or sell it.
Other Commercial Vehicle Financing Options
Most commercial vehicles depreciate quickly, losing as much as 20% of their value in the first 12 months following purchase due to the amount of work the vehicle will do. As a result, leasing is a common way of financing companies that regularly update or replace vehicles. It’s like hiring a car but for a more extended amount of time. Another advantage of leasing is that the lender does not usually require a down payment.
What Is The Procedure For Obtaining a Commercial Vehicle Loan?
When it comes to obtaining a commercial auto loan for your company, preparation is essential. Be ready to display both professional and personal documentation. Lenders will typically want to see the following:
- ASIC Documentation
- Driver’s license
- Bank statements
- Profit-loss statements
- Partnership agreements
- Cash flow statements
Lenders will conduct a risk assessment to ensure that you meet the qualifications for a business vehicle loan and that you meet their lending criteria. As a result, it’s best to contact lenders with a loan request that outlines business activities, how the car funding will be used, and any other financial statements.
We offer the most competitive interest rates and the fastest approval times in the industry. For a business car loan, contact the Credit Concierge right away!