If you’re a business that needs a fleet of vehicles you may need to rely on commercial auto loans to help finance them. Taking out a commercial auto loan can be a great way to earn a nice tax deduction as well as build credit for your business.

Commercial Auto Loan Proposal

If you’ve ever taken out a loan for your business before then you’re probably familiar with putting together a loan proposal. A written loan proposal can help you to secure commercial auto loans for your business. If you plan to use the vehicle for business it can be a good way to get a tax deduction on a vehicle you use every day.
The loan proposal should have a few key sections:

  • Why You Need the Loan - This section should outline how the vehicle will benefit your business. This is where you justify the cost.
  • How Much You Need - You should have an idea of how much money you are interested in borrowing. Do your vehicle research before putting together your commercial auto loan proposal.
  • How You Will Repay - You need to have proof that you are actually able to pay the loan back. Include how long you’d like to borrow the money for and what kind of interest rate you expect to get as well as an estimated monthly payment.
  • Collateral - You should outline any assets your business could use as collateral for a loan. Unless your business has great credit you will probably have to use collateral or a personal guarantee to get a loan (more on that below).

Researching Commercial Auto Loans

Like any other major financial decision you need to do your homework when taking on commercial auto loans. You should know ahead of time what your business and personal credit history looks like before applying for an auto loan. There are literally thousands of different lenders available to provide commercial auto loans so it’s important to shop around to find the best one.
Here are a few things to look for:

  • Interest Rates - Obviously the most important factor in any loan. The internet rate will dictate how much the loan will end up costing you.
  • Loan Terms - It’s important to fully understand the terms of any loan before signing on the dotted line. Know how long you will have to pay back the loan as well as any additional fees that may be included.
  • Qualifications - It’s important to note that every lender has different factors required to qualify for a loan. Before you apply make sure you know what these factors are and that you indeed qualify for a loan. Applying for loans that you’re rejected for can drop your credit score due to the inquiry of your credit report.

Using a Personal Guarantee for Commercial Auto Loans

If your business has bad credit or no credit at all you may be required to provide a personal guarantee on the loan. This basically requires you to co-sign on the loan along with your business. This means a lender will likely run a credit check on you personally before deciding if your business qualifies for a loan. This is why it’s important to know what kind of credit score you have before applying for a loan. It’s no fun to be told you have bad credit when sitting in the office of a loan officer.