Getting an auto loan for a new business can be difficult. In many cases, the lender will want you to personally guarantee the loan, or to simply get the loan in your name and work out the details with the company. With no personal credit, this becomes even more problematic. Fortunately, auto loans are among the easiest loans to get. After all, the nature of the purchase and required insurance secure the debt. The hardest part is getting the loan without paying high interest and large processing fees.
Gather financial documents for your company. The goal is to prove income. You'll want tax returns and bank statements for the past two years. If you don't have two years worth of records, bring what you do have.
Make copies of your articles of confederation and business license. You can use the originals, but copies mean you can lose them or leave a copy with the lender.
Decide, based on your cash flow, how much you're willing to spend on a car. Consider this both in terms of total price and monthly payment.
Make a list of items in your business worth a significant percentage of what you want to spend on a car. Note model numbers and your source for the value.
Research available cars using online resources and local advertisements. Come up with a list of three or four suitable vehicles in the price range you can afford.
Getting the Loan
Go to a reputable car dealer and negotiate the sale of a car that works for you. If you're not familiar with this process, do some research before proceeding.
Describe to the finance officer at the dealership how you want to finance the car: solely on company credit. Show the finance officer any documents he asks to see.
Offer collateral if necessary, using assets of the business you listed.
Contact your bank once the financial officer makes an offer. Speak to a personal banker and describe the situation. Find out if the bank you work with will beat the offer made by the dealership's financer.
Take the best offer given to you, using the papers you brought to complete all needed paperwork.
Consider refinancing the loan in a year or so. In many cases, the loan itself will help you improve the credit rating of your business, thus qualifying you for substantially better rates.
- Bartt Brick; Loan Officer (ret); US Bank; Portland, OR
- "Small Business for Dummies"; Eric Tyson; 1999