8 things to keep in mind when getting a business car loan
1. Check your business credit score and history.
Your personal credit score won’t be the only factor lenders look at when considering your loan application, but a strong credit score will give you a better chance of getting approved for a loan with favourable terms. Make sure to check your business credit report and score before applying for a loan so you can be prepared to address any issues that may come up.
2. Decide how much you need to borrow
Carefully calculate how much money you need to borrow to finance your business car. It’s important not to over-borrow, as this can put your business in a difficult financial position down the road
3. Consider the total cost of ownership
When you’re looking at business car loans, it’s important to consider the total cost of ownership (TCO) of the vehicle. TCO takes into account not just the purchase price of the car, but also things like fuel costs, insurance, maintenance and repairs.
4. Compare interest rates and terms
Interest rates and loan terms can vary significantly from lender to lender, so it’s important to compare your options before you choose a loan. Use an online loan calculator to estimate your monthly payments so you can find a loan that fits your budget.
5. Consider what type of loan will suit your business best
There are a few different types of business car loans available, so it’s important to choose the one that best suits your needs. For example, you might be considering chattel mortgage vs finance lease, depending on how long you need the car for and whether you want to own it outright at the end of the loan term.
6. Read the fine print
Be sure to read the fine print of any loan agreement before you sign on the dotted line. Pay attention to things like the interest rate, repayment schedule, fees and penalties, and prepayment options.
7. Shop around
Don’t just go with the first lender you find. Talk to several different lenders to compare interest rates, terms and conditions. It’s also a good idea to get quotes from both banks and online lenders.
8. Get pre-approved
If you’re not sure how much you can borrow, or what interest rate you’ll be offered, it’s a good idea to get pre-approved for a loan before you start shopping for cars. This way, you’ll know exactly how much you have to work with and you can avoid getting in over your head.
Applying for a business car loan is a big decision, so it’s important to do your research and compare your options before you choose a loan. By following these tips, you can be sure you’re getting the best possible loan for your business.
