Loans and Credit

A Guide To Getting Car Finance As A Small Business Owner

Published on: November 11, 2022

Last Updated on: November 19, 2022

Car Finance

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Purchasing a motor vehicle for business is one of the most important improvements that may simplify processes or operations.

Apart from helping you commute to work, a car may provide mobile business services to customers. Therefore, investing in a car can help make your responsibilities easier.

One of the most cost-effective methods to finance the car buying process could be utilizing retained earnings from previous periods.

However, if that option isn’t available or sufficient, you can always choose other alternatives. And one of the most common financing options is applying for commercial loans.

Overview Of Commercial Auto Loan

A commercial auto loan is an equipment or machine financing option that gives business owners capital to buy vehicles. It’s one of the best ways to own motor vehicles, especially for small businesses.

The good thing about commercial auto loans is that you won’t have to find guarantors. The cars you’ve purchased become the collateral for the loan. Therefore, the financing company or lending institution will repossess your cars if you default in clearing the loan.

Commercial Auto Loan

You must also understand that the commercial auto loan is like any other type. For instance, you’ll be required to make equal monthly installment, which includes part of the principal amount and the accrued interest.

And while the interest rate differs from one lender to another, commercial auto loans are usually cheap. Therefore, your small business can afford to repay it.

Types Of Commercial Auto Loans

There are different types of commercial auto loans. But the most common ones are:

1. Equipment Financing

The first type of commercial auto loan is equipment financing. This is a credit facility that can help to finance all the machines necessary to run your business. You can use this loan to purchase, lease, or repair any equipment, including motor vehicles.

One benefit of finding an equipment financing loan is that the lender may provide 100% finance for your vehicle. However, they may require you to make some down payment if your type of car has a high depreciation rate.

Another thing to note about equipment financing is that some lenders are flexible regarding the age of your company.

However, others will require your business to have been in operation for a certain minimum duration like two or five years. Ensure you partner with the leading car finance for ABN holders regarding car financing.

Equipment Financing

2. Short-Term Loans

You can also apply for short-term loans to help purchase cars for your small business. And unlike most other types, lenders of short-term loans are less bothered with credit scores. Therefore, you can still apply and qualify for a loan even if your credit score is low.

You must also understand that short-term loans take less time to process compared to many other traditional commercial auto loans. Besides, you can use it to finance any business project, including purchasing motor vehicles. Therefore, short-term loans could be ideal if you want quick cash to purchase company vehicles.

Short-Term Loans

3. Documents You Need To Get A Car Loan

Banks and other lending institutions offer a variety of business car loans to small businesses. However, you must prove to the lender that you can afford to make the loan repayments. With that, most lending companies will require you to produce various documents.

Car Loan

Some of them include the following:

A. Documents Of Ownership

Before you apply for the loan, you must ensure you provide the lender with documents showing that you own the business. For instance, you should provide the lending institution with articles of incorporation showing that you own a stake in that company.

And for other types of business structures like partnerships, you must provide a partnership agreement and other documents that might be asked for by the lender.

B. Business Documents

As noted earlier, some lending firms may require your business to have been in operation for a certain duration. But how can you prove that your company has been in existence?

Maybe you could turn to a certificate of incorporation, which shows the date when your firm was established. However, that alone might not be good enough to prove that your business has operated for the required duration. For that reason, you need to organize other documents.

For instance, you can consider providing tax return documents and cash flow statements for previous years. And in some other instances, the lender may ask for a business plan explaining the purpose of purchasing motor vehicles.

C. Personal Information

If you run a sole proprietorship enterprise, you and the company are the same things. Therefore, you’re the guarantor of your car loan. And in such a case, you’ll be required to provide personal information. For instance, you may be required to provide personal tax returns to determine your ability to repay the loan.

How To Apply For A Commercial Auto Loan

Now that you’ve organized your documents, it’s time to apply for the loan. But you need to follow the right steps.

How To Apply For A Commercial Auto Loan

They include the following:

  • Select The Car

The first step to securing a commercial auto loan is to choose the motorcycle. And the most important question to answer is whether you want a brand new or old car. You must also determine the purpose of the car, its cost, and the kind of maintenance it may require.

  • Determine Your Qualifications

Another step is to determine the type of commercial auto loan you qualify for. That can be affected by many things, including your credit score and the duration you’ve operated your company. Always ensure you apply for the kind of loan you qualify for to increase your chances of succeeding.

  • Find Your Lender

There are several commercial auto loan lenders. However, not everyone can be suitable for your project. One of the simplest ways to apply for a loan is to go for a company you have a pre-existing relationship.

But if none, you can find a new partner. However, the selected company must be reputable, reliable, and experienced. After a lender, make your application and wait for their response.


As detailed in this guide, there are various options for financing cars for your small business. And different lenders have different requirements to qualify you. Ensure you sign a deal with the right partner for your car financing needs.




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