Business auto loans offer companies the opportunity to finance vehicles to complete a job, transport employees, and bring customers to their business. Traditional and online lenders offer commercial auto loans with varying minimum requirements, repayment terms, and funding amounts. We conducted an auto loan comparison based on these criteria and selected seven top options.
Top 7 Business Auto Loans 2019
Provider | Best For |
|---|---|
(Best Overall) Low rates without funding restrictions on dealership vehicles | |
A national lender that offers financing for dealership and private vehicles | |
Online loans that offer similar rates and terms to traditional banks | |
Companies west of the Mississippi needing new or used vehicle financing | |
Established businesses on the East Coast wanting low-cost vehicle financing | |
Funding up to $5 million for a fleet of vehicles | |
Borrowers with low personal credit scores |
What a Business Auto Loan Is
A business auto loan is any financing used to purchase a new or used vehicle that’s necessary for business operations. This includes vehicles used to transport customers, staff, and goods such as cars and vans. Business owners can apply for a commercial auto loan from a traditional bank, auto dealership, or alternative small business lender.
The application process is not significantly different from a personal auto loan. Businesses will need to provide a business tax ID and in some cases, lenders will run a business credit check. Rates are also similar, except for commercial only use vehicles like vans, which may have higher rates. Larger loan amounts are available with commercial vehicle financing, but most lenders will require business tax returns as part of the application.
Who a Business Auto Loan Is Right For
Businesses use auto loans to finance commercial vehicles necessary for operations. These uses include offering employees a company car, transporting customers, and moving goods between facilities. Some business owners may also prefer having a separate vehicle to simplify their accounting.
Businesses use business auto loans to:
- Provide vehicles for employees: Businesses may need a company vehicle for employees to visit clients or as a job perk for staff in a competitive labor market.
- Transport customers: Businesses that offer transportation services to customers to increase visitations like doctors’ offices.
- Move goods short distances: Contract manufacturers needing to transport goods a short distance to a warehouse for storage can finance a van or small truck.
- Keep personal and business vehicles separate: Business owners wanting a separate vehicle for their business to manage expenses and keep personal finances separate.
The reasons businesses seek a commercial auto loan vary and will impact the lenders they work with. Most traditional lenders and financing companies have high credit score requirements to qualify and won’t finance the entire cost of the vehicle. However, according to a Federal Reserve survey, 80% of commercial auto loan applicants get approved for at least some financing.
Dealership Financing
Business owners that have selected a vehicle at a dealership can ask their dealer to run their qualifications through the system and find them the best rates on financing. Many of the lenders on our list have connections to the database and this can be the best way to conduct auto loan comparisons without submitting multiple applications. The exact rates and terms a dealership offers will vary based on the term, vehicle, and borrower qualifications.
Automaker Financing
Automakers often have a financing department that can offer borrowers even lower rates than traditional banks. There are some automakers that have an online application that business owners can complete to pre-qualify. However, most of them require that business owners select a vehicle and apply through an authorized dealer for financing.
How We Evaluated Business Auto Loans
The best business auto loans offer borrowers low rates, long repayment terms, and sufficient loan amounts to purchase any vehicles they need to conduct business. The minimum qualification requirements for these loans differ, and we included options for both prime credit and bad credit borrowers. Our auto loan comparison also includes options for fleets and business owners needing an online application process.
The criteria we used to evaluate the best business auto loans for small business owners are:
- Rates and fees: Small business auto loans have lower rates than many other forms of financing because lenders collateralize a loan with the vehicle. There are small additional fees like application or document fees also associated with the loan.
- Loan amounts: The amount of financing a business can receive to cover the cost of the vehicle and additional costs such as taxes and commercial auto insurance.
- Repayment terms: How frequently a business needs to make payments on financing and how long the loan will last.
- Qualification requirements: The personal credit score (check yours for free here), annual revenue, and time in business requirements borrowers need to meet to qualify.
- Vehicle restrictions: The age, mileage, value of the vehicle that lenders will finance. Some lenders also restrict the source of the vehicle to approved dealerships.
- Speed of funding: Traditional lenders can take up to a week to provide funding and often require borrowers to visit the branch. We also selected options for business owners needing funding quickly and want to avoid meeting with a loan specialist.
Based on these criteria, we recommend Bank of America as the best overall business auto loan provider. It offers low starting rates of 3.74% with no maximum funding amount and repayment terms up to six years. Existing customers can apply online and new customers can visit a branch to pre-qualify for funding as soon as the next business day.
Bank of America: Best Overall Business Auto Loans
Bank of America business auto loans are the best overall option for small business owners because of its low rates, lack of funding restrictions, and easy-to-meet qualifications. Businesses can finance vehicles up to 5 years old with up to 75,000 miles. Bank of America can provide pre-approval the next business day to qualified business owners.
Bank of America Commercial Auto Loan Rates and Fees
Bank of America commercial auto loan rates and fees include:
- Starting APR: 3.74% for new cars and 3.94% for used cars
- Origination or maintenance fee: None
- Prepayment penalty or termination fee: None
- Additional fees: None
Bank of America ranked first on our list of the best business auto loans because of its low starting rates. Most small business owners will find that traditional lenders like Bank of America can offer them the best rates but impose more restrictions and requirements. Although Bank of America does not disclose a maximum rate, a conversation with a representative revealed that rates rarely exceed 12% for qualified borrowers.
Bank of America Commercial Auto Loan Terms
Bank of America commercial auto loan terms include:
- Loan amount: $10,000 to no maximum
- Repayment term: Four, five, or six years
- Repayment schedule: Monthly
- Collateral: Vehicle titled in the business name
- Personal guarantee: Required
- Speed to funding: One to three days
Bank of America also stands out among other lenders because it does not specify a maximum funding amount. This enables small businesses to grow and access additional vehicle financing to expand their fleets. Its minimum repayment terms are longer than other lenders, with a minimum of 48 months, reducing the monthly payments that small businesses owe.
Bank of America Commercial Auto Loan Requirements
Bank of America commercial auto loan minimum requirements include:
- Vehicle age limit: Up to five years
- Mileage limit: Up to 75,000 miles
- Qualified vehicle sellers: Dealerships, CarMax, Hertz, Enterprise, or Caravan
- Credit score: No specific minimum, but a 680 credit score or better is standard for traditional lenders
- Annual revenue: No annual revenue requirement
- Time in business: No minimum time in business, startups and new businesses can qualify
Although Bank of America offers low rates and longer repayment terms, it has some of the most stringent vehicle qualification requirements we evaluated. Vehicles over 5 years old and those with over 75,000 miles won’t qualify for financing from Bank of America. Business owners can also only finance vehicles with the lender that are purchased through a dealership and not a private party.
What a Bank of America Commercial Auto Loan Is Missing
Small business owners can get low rates and long repayment terms on auto financing from Bank of America, however, older and high mileage vehicles may not qualify for financing. Business owners looking to purchase a vehicle from a private seller or one that does not meet the minimum requirements of Bank of America should consider a different traditional lender like Wells Fargo or an online lender like Crest Capital.
Bank of America Commercial Auto Loan Reviews
Bank of America commercial auto loans do not have specific reviews on our site or on the web. However, business owners have been working with Bank of America for many years and often return for multiple loan products and are satisfied with both their experience and the customer service they receive. We found some negative views and based on them we recommend that business owners scrutinize the terms and fees of their loans.
How to Apply With Bank of America
Business owners interested in applying with Bank of America will need to provide their annual gross business revenue, articles of organization, and personal information. Borrowers can complete the application process over the phone or online for existing Bank of America customers, but new customers will need to work with a loan specialist at a Bank of America branch.
Wells Fargo: Best for Dealership and Private Vehicles
Wells Fargo auto business loans allow business owners to qualify for auto financing for vehicles purchased from dealerships and private sellers up to $100,000. It offers low rates and long repayment terms on business auto financing up to $100,000. Existing Wells Fargo customers can apply online and new customers can apply at a branch and receive approval for in 48 hours.
Wells Fargo Business Car Loan Rates and Fees
Wells Fargo business car loan rates and fees include:
- Expected APR: 6.25% to 10.25% (rates change weekly)
- Origination fee: None
- Additional fees: Documentation fee of $150
Wells Fargo offers small business owners APRs between 6.25% and 10.25%. However, business owners should keep in mind that these rates are subject to change every week and may vary from state to state. Besides interest, Wells Fargo requires borrowers to pay a documentation fee, which it may waive in some cases.
Wells Fargo Business Car Loan Terms
Wells Fargo business car loan terms include:
- Loan amount: $10,000 to $100,000
- Repayment term: 24 to 72 months
- Repayment schedule: Monthly
- Collateral: Vehicle titled in the business name
- Personal guarantee: Required
- Time to funding: Two to five business days after completing an online, phone, or in-person application
Wells Fargo only offers loans up to $100,000, which is low based on our auto loan comparison. The repayment terms also extend up to six years, but the lowest minimum is 24 months giving businesses that would like faster payment terms an option that’s more flexible than Bank of America. Like most traditional auto business loans, Wells Fargo uses the vehicle as collateral with a personal guarantee from the business owner.
Wells Fargo Business Car Loan Requirements
Wells Fargo business car loan minimum requirements include:
- Vehicle age limit: Up to 10 years old
- Mileage limit: No set restrictions, but the lender relies on vehicle value to originate the loan
- Qualified vehicle sellers: Dealerships or private party with a free-and-clear title
- Credit score: No specific minimum, but a 680 credit score or better is standard for traditional lenders
- Annual revenue: No minimum annual revenue requirement
- Time in business: No minimum time in business, startups and new businesses can qualify
Some business owners will find Wells Fargo is the best auto business lender for them because of its low vehicle restrictions. Qualifying vehicles for business use can be up to 10 years old and have no set mileage maximum. Wells Fargo also offers financing for vehicles from private parties, as long as the title is free-and-clear, making it the best option for businesses wanting to purchase a used vehicle from a private party.
What a Wells Fargo Business Car Loan Is Missing
Business owners wanting to work with the traditional lender that has low vehicle requirements with quick funding speeds and low overall rates need to look no further than Wells Fargo. However, a growing business that expects needing funding over $100,000 soon will need to consider a different lender like Bank of America, because of the low maximum loan amount offered by Wells Fargo.
Wells Fargo Business Car Loan Reviews
Wells Fargo auto business loans don’t have specific reviews on the web or on our site. However, business owners approve of Wells Fargo and keep their business checking accounts, term loans, and other financing products with the lender. We found some reviews that noted the long response time from customer service, however individual reports vary by time and location.
How to Apply With Wells Fargo
Business owners that have a Wells Fargo business checking account can apply online. However, new applicants must visit a branch person to submit an application and get pre-approved. This application will require some business documentation, personal information, and vehicle details. Business owners can also get pre-approved, receive their rates and terms and spend up to 60 days shopping for the right deal on a vehicle.
Crest Capital: Best Online Business Auto Loans
Crest Capital has the best option for business owners needing an online business auto loan. It has long repayment terms and interest rates of 5.5% with funding available the next day. A business can qualify online to borrow up to $500,000 in funding for vehicles released after the year 2000 and no mileage restrictions.
Crest Capital Business Auto Loan Rates and Fees
Crest Capital business auto loan rates and fees include:
- Average APR: 5.5% to 9.5%
- Origination fee: First-month down payment and $275 administrative fee
The starting interest rate for a Crest Capital auto loan is 5.5% and does not include any fees. Crest Capital shared the average APR it offers is comparable to traditional lenders, and it ranges from 5.5% to 9.5%. However, business owners should note that the first-month payment is due at signing and Crest Capital adds a $275 administration fee to the loan.
Crest Capital Business Auto Loan Terms
Crest Capital business auto loan terms include:
- Loan amount: $5,000 to $500,000
- Repayment term: 24 to 72 months
- Repayment schedule: Monthly
- Collateral: Vehicle being financed
- Personal guarantee: Required
- Time to funding: One to three days
Crest Capital auto loans offer one of the largest financing amounts available to small businesses at $500,000. It also has similar repayment terms, collateral, and personal guarantee requirements as traditional lenders do. One standout feature of Crest Capital is its ability to fund business loans in one to three days with no branch visits.
Crest Capital Business Auto Loan Requirements
Crest Capital business auto loan minimum qualifications include:
- Vehicle age limit: As old as the year 2000
- Mileage limit: Any mileage
- Qualified vehicle sellers: Dealerships or private party with a free-and-clear title
- Credit score: At least 650
- Annual revenue: No stated minimum
- Time in business: At least two years
Crest Capital has a lower vehicle age requirement than most traditional lenders, offering to finance any vehicle produced after the year 2000. It also offers finance vehicles purchased from a dealership or from a private party as long as the title is free-and-clear. One drawback with Crest Capital is that it has a minimum time in business of two years, so startup businesses cannot qualify.
What a Crest Capital Business Auto Loan Is Missing
Crest Capital offers borrowers a comparable option to a traditional auto loan with the benefit of fast funding and an online application. However, it has a minimum time-in-business requirement of two years and its rates can be higher than some traditional lenders.
Crest Capital Business Auto Loan Reviews
Crest Capital reviews are positive around the web. Most users that left positive reviews noted that the application process was simple and that they were happy to receive funding. Some negative reviews noted that the documentation requirements for larger loans were more extensive than the requirements for other online alternative lenders.
How to Apply With Crest Capital
To apply for a business auto loan with Crest Capital, applicants must provide proof of ownership, an equipment quote, and some personal and business information. For funding amounts exceeding $250,000 businesses will also need to provide tax returns, financial statements, and a list of current loans and leases. Borrowers can complete the application online, with funding up to $500,000 available as soon as the next day.
U.S. Bank: Best Business Auto Loans West of the Mississippi
U.S. Bank business auto loans are available in states with a U.S. Bank location, which are located west of the Mississippi River. The loans are larger than those offered by Wells Fargo and offer funding up to $250,000 to small business owners needing a new or used vehicle. The vehicle age and the loan term cannot exceed a combined 10 years, and applicants can receive funding in as quick as one week.
U.S. Bank Business Auto Loan Rates and Fees
U.S. Bank business auto loan rates and fees include:
- Expected APR: 4.49% to 11% based on a 60-month term
- Origination fee: $75 one-time fee
- Additional fees: None
U.S. Bank business auto loan rates are like other traditional lenders we reviewed. It also charges an origination fee of $75, which is lower than the documentation fee charged by Wells Fargo. Although we listed the expected APR reported by U.S. Bank, business owners should keep in mind that rates may change and that their particular rate will depend on their creditworthiness.
U.S. Bank Business Auto Loan Terms
U.S. Bank business auto loan terms include:
- Loan amount: $5,000 to $250,000
- Repayment term: Up to 84 months for new vehicles and up to 72 months for used vehicles
- Repayment schedule: Monthly
- Collateral: Vehicle titled in the business name
- Personal guarantee: Required
- Time to funding: Up to one week, initial response in as quick as three days
Business owners can receive more funding from U.S. Bank than they can from another traditional lender like Wells Fargo. Although funding takes longer, U.S. Bank distinguishes itself by offering small loan amounts as low as $5,000. This makes it a great option for businesses wanting to purchase a low-cost used vehicle.
U.S. Bank Business Auto Loan Requirements
U.S. Bank business auto loan minimum requirements include:
- Vehicle age limit: Up to 10 years at the end of the loan term
- Mileage limit: No set restrictions, but the loan is based on the vehicle value
- Qualified vehicle sellers: Dealerships or private party with a free-and-clear title
- Credit score: At least 680
- Annual revenue: No minimum annual revenue requirement
- Time in business: No minimum time in business, startups and new businesses can qualify
Business owners can finance vehicles with a combined vehicle age and loan term of 10 years. This means a 4-year-old vehicle can have loan terms of up to six years. U.S. Bank also has a stated credit score of 680 which is comparable to the other lenders on the list and offers financing for both vehicles purchased from the dealership and from a private party.
What a U.S. Bank Business Auto Loan Is Missing
The long repayment terms, significant funding amounts, low vehicle restrictions, and other financial products U.S. Bank offers make it a great choice for most businesses. However, U.S. Bank branches are located west of the Mississippi River and business owners will need to visit a branch to qualify for funding. Unlike other lenders on our list of the best business vehicle loans, U.S. Bank requires that any private sellers attend the closing at a branch.
U.S. Bank Business Auto Loan Reviews
Borrowers did not leave specific reviews of U.S. Bank small business auto loans online or on the web but have positive things to say about their experience with the lender. Many U.S. Bank customers work with the lender over several years and receive multiple financing products for their business. The few negative reviews left about U.S. Bank were more concerned about surprise fees and came from users that misunderstood their terms.
How to Apply With U.S. Bank
U.S. Bank only offers applications over the phone for existing customers or at a branch. Business owners needing less than $50,000 must submit minimum paperwork and information. Those owners needing more than $50,000 will need to provide one year of business and personal tax returns, along with any outstanding credit obligations at the local branch. Borrowers can complete the application and get a response in three days.
PNC Bank: Best Midwest and East Coast Business Auto Loans
PNC Bank auto business loans are available on the East Coast where PNC banks are located and offer funding up to $250,000. Borrowers can receive low rates but should know PNC banks charge a prepayment penalty. Any business can complete an application online but will need to visit a branch to open a business checking account to receive funding. The application is quick and funding is available within one week.
PNC Bank Business Auto Loan Rates and Fees
PNC Bank business auto loan rates and fees include:
- Expected APR: 4.55% to 15%
- Origination fee: None
- Additional fees: Prepayment penalty of 1% for each remaining year on the loan
PNC Bank offers the widest range of APRs, amongst traditional lenders, to small business owners seeking business vehicle loans. Also, while there is no origination fee, there is a prepayment penalty that depends on the remaining term of the draw. PNC Bank charges business owners a 1% prepayment penalty for every year that remains on the loan term.
PNC Bank Business Auto Loan Terms
PNC Bank business auto loan terms include:
- Loan amount: $10,000 to $250,000
- Repayment term: 24 to 84 months
- Repayment schedule: Monthly
- Collateral: Vehicle titled in the business name
- Personal guarantee: Required
- Time to funding: Up to one week, initial decision within 48 hours
PNC Bank offers maximum financing identical to U.S. Bank, but its minimum loan amount is $10,000. It also offers longer repayment terms than most of the lenders, up to 84 months. Its time to funding of one week can be slow for some business owners.
PNC Bank Business Auto Loan Requirements
PNC Bank business auto loan minimum requirements include:
- Vehicle age limit: No set restrictions
- Mileage limit: No set restrictions
- Qualified vehicle sellers: Dealerships or private party with a free-and-clear title
- Credit score: At least 670
- Annual revenue: No minimum annual revenue requirement
- Time in business: At least three years
There are no set vehicle restrictions with PNC Bank, however, the bank has to be comfortable using the vehicle as collateral. It also has a lower credit score requirement than most traditional lenders, but only by 10 points. One of the major drawbacks is a newer business may have difficulty qualifying, as PNC Bank looks for at least three years of operational history.
What a PNC Bank Business Auto Loan Is Missing
PNC Bank is only available east of the Mississippi in 19 states but there are no set vehicle mileage limits, long repayment terms, and it offers the flexibility to finance vehicles from dealerships and private parts. Besides having a smaller footprint than most traditional lenders, PNC bank also requires a minimum of three years in business and charges a prepayment penalty.
PNC Bank Business Auto Loan Reviews
PNC Bank doesn’t have reviews specific to its small business auto loans. However, business owners have been working with the lender for an extended time and leave positive reviews about its customer service. Some negative reviews were left by users who received prepayment penalties or other fees, but those fees are clearly disclosed in the financing offer the PNC Bank makes.
How to Apply With PNC Bank
PNC Bank is one of the few traditional lenders that offers an online application to business owners that don’t have an established relationship with it. However, business owners that qualify will need to set up a business checking account with the lender to receive the loan, at a branch location. Business owners can apply online in minutes, receive an offer in 48 hours, and funding within one week.
Celtic Bank: Best Business Vehicle Loan for Fleets
Celtic Bank offers SBA loans up to $5 million with long repayment terms up to 10 years that businesses can use to finance the purchase of a fleet of vehicles. This is the largest loan on our list and offers borrowers the longest repayment terms we evaluated. Rates start at 7.75% but the total time to funding can take from 30 to 90 days.
Celtic Bank Business Vehicle Loan Rates and Fees
Celtic Bank business vehicle loan rates and fees include:
- Interest rates: 7.75% to 10.25%
- Expected APR: 8% to 11%
- Origination fee: 0.5% to 3.5%
The Small Business Administration (SBA) provides a partial guarantee for Celtic Bank business loans, which reduces the risk and results in lower SBA loan rates of 7.25% to 10.25%. This makes financing a fleet of vehicles affordable, leaving businesses with money to reinvest in operations. For every $10,000 a business borrows from Celtic Bank, it will owe between $2.00 and $2.80 in daily interest, lower than other financing options.
Celtic Bank Business Vehicle Loan Terms
Celtic Bank business vehicle loan terms include:
- Loan amount: $350,000 to $5 million
- Repayment term: Up to 10 years
- Repayment schedule: Monthly
- Down payment: 10% to 20%
- Collateral: Some collateral required (loan doesn’t have to be fully collateralized)
- Personal guarantee: Required
- Time to funding: 30 to 90 days
With Celtic Bank businesses can qualify for funding from $350,000 up to $5 million, which is the largest loan amount we reviewed. It can also receive repayment terms up to 10 years and monthly payments, which reduces the size of each payment businesses need to make. An SBA 7(a) loan with Celtic Bank can take 30 to 90 days to fund, making it a good option for well-planned expansions.
Celtic Bank Business Vehicle Loan Requirements
Celtic Bank business vehicle loan minimum requirements include:
- Credit score: At least 650
- Annual revenue: At least $100,000
- Time in business: At least two years
Business owners will need a personal credit score of at least 650 with two years of operational history to qualify with Celtic Bank. However, applying is worth the effort, because of the low interest rates, long repayment terms, and large funding amounts a business can receive.
What a Celtic Bank Business Vehicle Loan Is Missing
Celtic Bank offers businesses the opportunity to borrow up to $5 million, with the longest repayment terms we evaluated of five years. However, compared to the other options on this list the funding process is long, taking 30 to 90 days from the date a borrower completes an application. For a lender that offers a quick commercial auto loan, business owners can consider working with Crest Capital instead.
Celtic Bank Business Vehicle Loan Reviews
Reviews of Celtic Bank were positive on our site and around the web. Many positive Celtic Bank reviews noted the help received from the lender during the application process. Some negative reviews came from users concerned about defaulting on their loans, however, these reviews were rare.
How to Apply With Celtic Bank
Businesses can start an application online for a Celtic Bank SBA loan. The application process will require back and forth and extensive documentation to complete, taking 30 to 90 days to get funding. Business owners can qualify to borrow up to $5 million in funding to finance a fleet of vehicles with repayment terms up to 10 years and low starting rates of 7.75%.
National Funding: Best Bad Credit Commercial Vehicle Loan
National Funding offers commercial vehicle loans to business owners with a personal credit score of at least 500, making it a great financing option for business owners with bad credit. Rates start at 8% with loan amounts up to $500,000 and repayment terms up to one year. However, these are general working capital loans without collateral and may have higher rates than vehicle auto loans.
National Funding Commercial Vehicle Loan Rates and Fees
National Funding commercial vehicle loan rates and fees include:
- Interest rate: 8%
- Estimated APR: 10% to 136%
- Origination fees: 2%
National Funding offers borrowers starting interest rates of 8%, similar to the top lenders we evaluated for business auto loans. Business owners can use a National Funding business loan for working capital and an equipment purchase. Businesses can expect a higher APR of 10% to 136% with daily interest costs of $2.70 to $37.25 for every $10,000 they borrow.
National Funding Commercial Vehicle Loan Terms
National Funding commercial vehicle loan terms include:
- Loan amounts: $5,000 to $500,000
- Repayment terms: Three months to a year
- Payment schedule: Weekly payments
- Collateral: Blanket UCC filing on business assets
- Personal guarantee: Required
- Funding speed: As soon as the next business day
With National Funding a business can receive up to $500,000 for a business auto loan, which can also fund working capital expenses and any costs associated with the purchase. It has much shorter repayment terms than the other business vehicle loans we reviewed and requires more frequent weekly payments. However, there is no collateral requirement, opening up the range of vehicles that business owners can finance with the loan.
National Funding Commercial Vehicle Loan Requirements
National Funding commercial vehicle loan minimum requirements include:
- Personal credit score: At least 500
- Time in business: At least one year
- Annual revenue: At least $100,000
National Funding offers business owners with a credit score of at least 500 an opportunity to get the business auto loan they need. It also has no vehicle restrictions, because it is a working capital loan. Because of this, business owners will need to meet the minimum time in business and annual revenue requirements to qualify. But they can finance any vehicle they choose for the business.
What National Funding Commercial Vehicle Loan Is Missing
National Funding offers business owners with a personal credit score of at least 500 an opportunity to qualify for an auto business loan. However, there are some drawbacks, which include short repayment terms up to one year and an APR that can be as high as 136%. Business owners with low credit scores that need financing can work with National Funding but should apply with a traditional lender first.
National Funding Commercial Vehicle Loan Reviews
National Funding reviews are a mix of both positive and negative feedback from users. Users happy to secure funding after being turned down by other lenders left positive National Funding reviews. Negative National Funding reviews noted its high costs and unexpected fees. However, National Funding discloses the rate and fees when it presents a financing offer.
How to Apply With National Funding
National Funding has a quick online application that takes 15 minutes to complete and can get businesses funding in as quick as one business day. Loan amounts extend up to $500,000 and can finance an auto purchase for businesses and general working capital needs. Repayment terms extend up to one year, with funding available for borrowers with credit scores of 500 or higher.
Business Auto Loan vs Auto Lease
The primary differences between purchasing a car or leasing one for a business is the tax treatment, upfront cost, mileage, and what happens after the final payment. Both options offer mileage tax deductions, but only purchased vehicles can qualify for accelerated depreciation allowing a business to deduct more costs upfront.
Businesses also may need to provide a down payment for many auto loans, whereas an equipment lease has lower upfront cost making it a better option for some businesses. A lease may restrict the mileage put on the vehicle to preserve its value. Once a business makes the last payment on an auto loan it owns the vehicle, however, a lease may require an additional payment for the purchase.
Pros and Cons of a Business Auto Loan
Qualifying for a business auto loan can sometimes be difficult, but business owners can receive low rates and long repayment terms on financing for qualified vehicles. The application process can be slower than some online business loans, and business owners may need to visit a branch to apply, however, a business auto loan is by far the best way to finance a vehicle purchase for a business.
Pros of a Business Auto Loan
Some benefits of getting a business auto loan include:
- Low starting rates for qualified borrowers: Whether a business is getting a loan from a traditional or alternative lender, well-qualified borrowers can receive the lowest rates. Business owners can take advantage of this by applying when their credit scores are on an upward trend.
- Long repayment terms: Unlike most working capital loans that have terms up to three years, business vehicle loans offer terms up to six years and can extend even longer. The repayment terms offered by lenders vary based on borrower and business qualifications and the useful life of the vehicle.
- Flexibility in minimum qualifications for financing: Although the most qualified borrowers will receive the lowest rates, a wide range of businesses can qualify. These include newer businesses, companies that generate low revenue, and business owners with poor personal credit.
Cons of a Business Auto Loan
Some drawbacks of a business auto loan include:
- High personal credit score requirements: Although there are some bad credit small business auto loans available to borrowers, most lenders will require a credit score of at least 680 to qualify. This can make getting financing to purchase a vehicle for a business prohibitive for many borrowers.
- Smaller loan amounts than some financing alternatives: An SBA loan offers business financing options up to $5 million, however, borrowers must work with a lender a long time for a large funding amount. This is because the paperwork and due diligence required is much more extensive for asset-backed loans.
- Extensive paperwork requirements: Borrowers that apply for a loan and plan to use the vehicle as collateral will need to submit additional paperwork. This includes information about the vehicle, how the business plans on using it, and more extensive business financial information.
Business Auto Loan Frequently Asked Questions (FAQs)
We covered the best business auto loans for small businesses in this article. However, each financing situation is different and you may have further questions about your financing options. We’ve answered some of the most frequently asked questions below. If your question was not answered, feel free to ask it in the Fit Small Business forum.
How to get a business auto loan from a dealership?
Many dealerships will offer financing options for your business when purchasing a vehicle. However, getting a business auto loan from a dealership is often more expensive than other financing options. This is because the dealership typically marks up the rate offered by traditional lenders.
How to get business auto loans without a personal guarantee?
Getting a business auto loan without a personal guarantee can be challenging for most small businesses. Sometimes, business owners can qualify for financing based only on the earnings of their business and avoid the personal guarantee. However, this is rare and typically reserved for large businesses.
Can a business lease a car?
A business can lease a car and there are some tax advantages to doing so. However, not all businesses need to lease a vehicle to qualify for the benefits. For example, a sole proprietor or partnership can write off the business costs or mileage even if you lease the car on a personal account.
Bottom Line
Getting the funding a business needs to purchase a vehicle doesn’t have to be difficult. Business owners have auto business loan options from traditional and online lenders available to them. The best commercial auto loans for each business will depend on the vehicle being financed and the qualifications of business owners.
Bank of America offers small business owners the lowest financing rates and a convenient online application for funding without a maximum limit. Business owners can continue to work with the business as they grow and receive funding in as quick as one day after applying. Qualifying vehicles must be sold by a dealership, be less than 5 years old, and have less than 75,000 miles.
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