Business Car Loans: What You Should Know When Purchasing a Vehicle for Your Business
Business Car Loans: What You Should Know When Purchasing a Vehicle for Your Business
Posted on April 9, 2024
If you want to buy a new vehicle for your business, you don’t need to look for personal car loans. Instead, you should consider going for business car loans. If your company has a RIN (Register Identification Number), you can use it to finance your next car. If it’s your first time applying for a business car loan, it’s important to notice that it’s essentially different from personal loans. Learn more about this option here.
About Business Loans
Business car loans, just like personal loans, will check credit scores before signing the papers. However, your business credit score matters when you choose to finance it through your business. In many cases, buyers get better loan deals when using their RINs. It’s also a practical option if you want to separate your assets from your company’s assets. Additionally, if you choose a leasing contract, part of the payment can be tax-deductible.
Business loan terms usually last up to seven years, although you might find a shorter timeframe when buying a pre-owned vehicle. Moreover, you should bear in mind that longer terms mean costlier interest payments.
You can reduce your initial repayments by opting for a “balloon payment,” paying the amount due at the end of the term. While balloon payments can help you out at first, you’ll also have a lump sum to deal with at the end.
Business Car Loan Options
Business vehicle loans aren’t all the same. Here are the main options available.
Secured Business Loan
This option lets you secure a loan with your company’s assets, like equipment, vehicles, or properties. You can apply for those loans from banks, dealerships, and online lenders. Typically, this option allows you to borrow the total amount of the vehicle, or at least, very close to it.
Unsecured Business Loan
Conversely, this option doesn’t require you to involve your assets. Instead, you’ll receive a lump sum to be repaid in up to seven years. Banks and online lenders are the best way to go if you want an unsecured loan.
Commercial Vehicle Loan
A commercial vehicle loan is a kind of secured loan since it uses the vehicle as collateral. It’s possible to borrow high amounts with this option. However, your borrowing amount depends mainly on your company’s credit score and financial health.
Business Line of Credit
Alternatively, you can apply for a business line of credit with access to a revolving reserve of funds. Better still, this pool of funds can be used to cover the purchase, maintenance and repairs after buying the car.
Buy Your New Business Vehicle Scarborough Today
You’ll find the best loans and conditions to buy your new business vehicle at Roadsport Chrysler in Scarborough, ON. Explore our inventory to find your favourite model, and book a test drive today!