How to buy a car through your business

Sometimes companies need access to a vehicle on a regular basis or even from time to time in order to serve their customers. Buying a car under your company name that can be driven by employees often saves the company time and money compared to…

Sometimes companies need access to a vehicle on a regular basis or even from time to time in order to serve their customers. Buying a car under your company name that employees can drive often saves companies time and money compared to reimbursing employees to drive their personal vehicles. Purchasing a commercial vehicle can take a while, but by following some simple steps, you can make your next business vehicle purchase stress-free.

Part 1 of 5: Improve Your Business Credit Score

The first step to making sure you qualify for a business car loan is to make sure that your business's credit score is the best possible. Just like an individual, businesses can get credit by paying their bills on time, whether it's small loans or getting a business credit card and making regular repayments.

Step 1: Apply for a small loan. Start small and get a small business loan by always making your monthly payments on time. The loan doesn't have to be large, and your company may be best served if the loan is small enough that you can pay it off within a few months.

Step 2: Get a line of credit. You should also consider applying for a business line of credit. Credit cards are the easiest way to improve your business's credit score. Just make sure you pay on time.

Step 3: Get an EIN. Provide your company's Employer Identification Number (EIN) to all vendors and other companies you do business with and ask them to report your Dun & Bradstreet or Experian credit scores. This will help your company get an EIN loan instead of using your personal social security number.

EIN is provided by the government. It works the same for a business as a social security number does for an individual. Lenders, suppliers, and government agencies will use your EIN to identify company transactions at tax time, including verifying that your company purchased a vehicle. If you are still in the process of setting up your business and do not yet have an EIN number, follow these steps:

• Complete IRS Form SS-4, which establishes an EIN for a company. You can find it on the IRS website. If necessary, you can find resources to help you complete your EIN paperwork correctly online.

• After you receive your EIN in the mail from the IRS, list your business with your state, including the new EIN.

Part 2 of 5: Prepare a loan offer

Once you've obtained an EIN for your business and established a good credit score, it's time to make a loan offer for the car you want to purchase through your business. The loan offer contains information such as why your company needs the car, who will use it and for what purposes, as well as information about the loan amount you need. This loan offer helps show lenders, whether at the bank, through online lenders or through dealer finance partnerships, that you have a good understanding of the market and also have strong management skills.

Step 1. Make an offer. Start writing a loan proposal. Any lender you apply to should know why your business needs to purchase a car. Every time a lender lends money to a business, they must consider the risks involved and the feasibility of buying a car for your business.

Step 2: Document all drivers. Also, be sure to document who will be using the vehicle. While the business owner's wife using a car might not be a good enough reason, it might be if she is a salesperson in the business and needs it to visit customers in person. Specify who plans to use it and for what purposes.

Step 3: Calculate how much money you need. When looking for a business car loan, lenders also need to know how much money you need. You must also indicate how much you have as a down payment on the loan and whether you have any collateral.

• FunctionsA: In your loan proposal, be sure to mention your company's marketing strategies as well as past and current performance of your business. This can help build a deal with the lender about how good your company's overall investment is.

Part 3 of 5. Find a car dealership with a commercial division

Look for a dealer with a dedicated commercial sales department. They will be more knowledgeable about selling cars to businesses, which will help ensure that transactions run smoothly and provide you with the best deals.

Step 1: Explore Dealerships. Research various dealerships in your area to find one that finances and sells cars to businesses. Many of them offer special programs and even fleet discounts when buying multiple vehicles.

Step 2: Compare dealerships. Check their rankings with the Better Business Bureau. This can help weed out dealerships with poor customer ratings.

Step 3: Ask for recommendations. Ask other companies that have company cars where they made the purchase. You can also search online for reviews from other companies about a particular dealership.

Step 4: View Inventory. Check the dealer websites to see what inventory is available and if they have a list of business units with details of companies buying cars. You should also compare the prices of the various dealers you want to use, and while this shouldn't be the deciding factor, price should play an important role.

Part 4 of 5. Reduce your list of creditors

You will also need to put together a list of lenders that you are interested in using to provide money to buy a car. You should base your list of lenders on what interest rates they offer and the terms of any loan. Finding a viable lender is an important part of the process, as the lender must approve you for a loan. That's why it's important to make sure your credit score is in order before approaching lenders.

Step 1: Find a lender. Find out which companies offer business loans. Some of the most popular lenders include:

• Banks where you have business accounts. See if they offer special rates for companies that have an account.

• Online lenders that specialize in business auto loans.

• Large dealership with a credit department.

Step 2. Choose the best options. Reduce the list to three that offer the best prices and conditions. Don't get rid of your large list, as you may not meet your first choice of lenders.

Step 3: Find out the requirements of creditors. Call the lenders on your short list and ask them what they need when it comes to credit score and business history. Be prepared if you are not eligible for a loan from a lender due to your credit score and business history.

Step 4: Be persistent. If your first choice doesn't work with your current credit and business history, you need to go back to your list and select at least three more to call. Keep going down the list until you find a lender that offers terms and interest rates you can live with.

• FunctionsA: If your business has been around for a while, you probably won't have any problems getting an auto loan. If your company is new and has no credit history, you may need to do additional research to find a suitable lender.

Part 5 of 5: Loan Completion

The last step in the loan process, after finding the car or vehicles you want, involves submitting all the required documents. Once the lender has reviewed your documents, including the loan offer, they can either approve or reject your loan. If they accept your loan, all you have to do is complete and sign the lender's paperwork.

Step 1: Negotiate a Price. Once you have found a lender that suits you, negotiate the purchase price of your chosen vehicle. Be prepared to increase your down payment to make up for your lack of credit history.

Step 2: Organize Documentation. In addition to your loan offer, provide documentation for your business, including a balance sheet, income statement, and tax returns for prior years. This can help prove that you are a reliable credit risk even without a long credit history.

Step 3: Register your vehicle. Once you have signed all relevant paperwork, make sure the vehicle is registered with your business and that all paperwork has the company name on it. By making sure you do this, you can help when it comes time to pay taxes for your business.

Eligibility for a business car loan is final if you have good credit and provide the lender with a good reason as to why you need to purchase a car for your business. Before purchasing a vehicle for your business, have one of our experienced mechanics perform a pre-purchase vehicle inspection to ensure there are no hidden issues.