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Can I Get a Car Loan in My Business Name?

It is possible to get a car loan in your business’s name, but it is not as simple as getting a personal car loan. There is a wealth of additional documentation that you will be required to furnish, and your business must be relatively well-established to qualify. Typically, it will need to be at least 2-years old, with established credit, income, and legal documentation.

What Your Business Needs to Qualify

  • Established Lines of Credit:  The first thing you will need to establish is credit for the business. Things like lines of credit with suppliers, office supply stores, gas stations, etc.
  • Established Revenue:  Lenders are going to want to see at least two years of established revenue for your business. That means you will need to show that a regular amount of cash has been paid to an EIN.
  • Business Banking Accounts:  You will also need to have business banking accounts. You may also need to have documentation of an LLC, LLP, or articles of incorporation.
  • Corporate Insurance:  You will have to carry corporate/commercial insurance on the vehicle. You will find that this is more expensive than insuring a personal vehicle. It can be much more expensive if you only have 1-3 company vehicles. The cost is so high that it can erase your profit margin.

Tax Deductability of your Business Vehicle

As you know, the purchase of a vehicle used solely for business purposes is tax-deductible, as is the depreciation on said vehicle. Depreciation can be accelerated in some cases, so that you can take a deduction in a single year for future years of depreciation. However, if you take this accelerated deduction but wind up selling the vehicle before it has fully depreciated, then you will be required to report the difference between what you sold it for and the depreciated value as income. A more in-depth discussion of the finer intricacies of vehicle depreciation and tax deduction is beyond the scope of this article. It is best to consult your tax professional for guidance.

Where to Go for Financing Needs

Typically, it is best to start with the bank or credit union where your business accounts are located. You have an established relationship with this institution, which should aid in the application and approval process. Most dealer F&I (Finance & Insurance) managers are not as experienced with business lending needs as loan officers at banks and credit unions, so this is not the place to start. Keep in mind, though, that even if you have all of these things in place and have a significant down payment, it can be difficult for a small business to get a commercial car loan. If you have been turned down by your normal banking partner and the lending arms of automakers, you may want to try an online specialty lender. They usually have looser lending guidelines, making it easier for you to get the auto loan that your business needs.

About the Author

The author has many years of experience in automotive finance and insurance. However, each consumer's situation is unique. It is best to contact a finance specialist for further assistance.
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