Important Facts About Business Car Loans
As your business grows, so does its needs. At some point in your operations, you will want to meet your clients or better still, deliver their purchased goods at their premises. A business car will help you cater for these needs and improve your customer relations hence making your clients more loyal. When thinking of vehicle financing options, there are lots of alternatives to choose from.
There are bad credit card loans, finance lease, commercial hire purchase, novated lease, chattel mortgages and secured or unsecured car loans. When presented with a wide array of options, it is possible to get confused and go with whichever option your bank recommends, but it is important to carry out due diligence because your choice could cost you more in the long term. Other options available for Australians are credit cards and personal loans that they can use to finance their vehicles.
Eligibility criteria for a business car loan
You will have to meet certain conditions for your loan request to be approved. Below are some of the requirements you have to fulfill to be eligible:
The car must be used for business – you will have to use your vehicle solely for commercial purposes. Failure to do that you may not be eligible for this kind of loan.
Talk to your employer – the business may not be yours. In such a case, you will have to speak to your employer to provide the necessary documentations for you to get approved for the loan.
Meet the standard lending criteria – all lenders have certain requirements that you need to fulfill for you to be eligible for their loans. Make sure you meet the requirement of your potential lender.
How to apply for a business car loan
Different lenders look for different things when you are applying for loans, and each loan is unique. So the application procedures vary from loan to loan. Below is the standard procedure that applies to most car loans:
Step 1: Prepare a detailed proposal
Any business loan requires a detailed proposal. Purchasing a business car should be treated with the seriousness it deserves. You will need to tell your lender why you need the loan, how much the car will cost and if you will be able to pay off your loan. Let the bank know more about your business operations. The more convincing your proposal is, the likely you will get the loan
Step 2: Contact your finance broker or bank for advice
Your broker or bank probably knows the best lenders with affordable interest rates. Having a trusted financial advisor will lessen your confusion because they will help you choose which options best suits you. They will also help you prepare the documentations required for the loan applications.
Step 3: Prepare documentations
You will have to provide documentations about your business. Your business documents should better paint the financial stability of your business for the lender to scrutinize. If the firm is not yours, the employer will have to produce proof of your employment.
Step 4: Wait for approval
The waiting time may vary. Many lenders will require more time to dig into the information about your business for them to ascertain your financial stability. Factors that may prolong the waiting period are like credit history or credit score.
It is important to note that your application may be declined due to several factors. This should however not discourage you. You can still apply for other loan options like bad credit business car loans.
Every lender will require proof that your business can service the loan in full. You will have to produce the following documents when applying for your business car loan:
Most lenders tend to prefer companies that have been operational for at least two years. You will need to provide cash flow statements, bank statements, a business plan, and tax returns for the period you have been in business.
Your potential lender will have to see your debt to income ration to ascertain if you will be able to pay the debt. Your credit score and credit history are also an important consideration that may affect your eligibility for the loan.
Proof of ownership
The lender will need to know that you own the company or have ownership state in the business. You can do this by providing articles of incorporations, company document or business license.
A car is business equipment. It will add value to the firm and therefore it is important that when making such a huge financial decision of purchasing a car, always lean on the side of caution. Do your research well so that your purchase does not cost you more money.
Make the right investment decision. Call us today and let us help you understand everything there is to know about business car loans.