Business Banking. Auto Loan

Cars can be financed under the business even if they are only partially used for business. The interest rate is usually tax deductible to the extent that the car is used for business purposes. For example, if the car is used for business 70% of the time, 70% of the interest paid is tax deductible. Cars can be financed by the bank, but most dealerships will also be able to finance it under the business.

The lenders will look at the following factors when considering a business auto loan application:

• Business revenue

• Business net income

• Income of the guarantor

• Credit score of the Business

• Credit score of the guarantor

• Downpayment amount

To start the process of financing a car for the business, apply with your bank to get a conditional approval. The conditional approval locks your interest rate for a set time, usually, 30 days. Find the car you want to buy. Go to the seller and present the bank approval. If the seller is in the bank’s network, they will automatically charge the bank and will give you the keys to the car. If not, the seller will prepare a sales agreement that the buyer will send to the bank. The bank will pay the seller and the buyer will get the key.

When choosing a lender for an auto loan, consider the following:

• The requirements for the car - maximum mileage, year or condition. Also, large vans and trucks typically don’t qualify.

• The dealership network - if the bank has many dealerships in their network, it will make the buying process much easier.

• The rates and prepayment penalties.

• Downpayment requirements