Business Auto Loans: How to Qualify and Best Options

If your company relies on one or more vehicles, a business auto loan can be an affordable way to buy a car, van or truck. You can also use one to refinance a vehicle you already own to save money.

Business auto loans come with built-in collateral — the vehicle itself. That means business auto loans may cost less or be easier to qualify for than other small-business loans. And depending on the lender, you may not have to provide a personal guarantee to secure the debt.

Below are the top lenders across key categories. Select a lender to jump to details about its offerings, or keep reading to learn more about the best business auto loan options and tips.

• Business-use passenger vehicles: PNC.

• Locking in a rate while shopping: Bank of America.

• No personal guarantee: Ally Bank.

• Startups and borrowers with bad credit: National Funding.

• Large commercial and specialty vehicles: Wells Fargo.

• Longer repayment terms: Truist.

• Veterans: Navy Federal Credit Union.

• Same-day funding for commercial trucks: Balboa Capital.

• Heavy truck loans and leases: JR Capital.

• Borrowers with bad credit: eLease.

• Hard-to-finance trucks or specialty vehicles: Crest Capital.

Key facts:

• Loans from $10000 to $250000. 

• Terms up to 72 months. 

• Fixed interest rates. 

Read our full PNC Bank business loans review.

Key facts:

• Loans starting at $10000.

• 30-day rate lock guarantee.

• APRs starting at 5.79%.

Read our full Bank of America business loans review.

Key facts:

• Option for no personal guarantee. 

• Terms up to 75 months.

• Funding can be used to modify existing commercial vehicles. 

• Must apply through a dealership.

» MORE: Business loans you can get without a personal guarantee

Key facts:

• Loan amounts up to $150000. 

• Terms ranging from 24 to 60 months. 

• May get a discount for paying the loan back early.

• Startups and borrowers with bad credit may qualify.

Read our full National Funding review, or check out more options for startups business loans and equipment loans for bad credit.

Key facts:

• Up to 100% financing for some specialty vehicles. 

• Seasonal payment options available.

• Fixed interest rates.

Read our full Wells Fargo business loans review.

Key facts:

• Up to $250000, but you may be able to qualify for more if you have $2 million in revenue.  

• Terms up to 84 months. 

• Interest rate discounts for Truist business checking account holders.

• Can finance the full amount of the vehicle without a down payment, plus 10% to cover soft costs, like delivery and taxes.

Read our full Truist business loans review.

Key facts:

• Starting at $10,000. 

• Terms up to 72 months.

• APRs starting at 4.09% for new vehicles, and 5.19% for used.

• No fees or prepayment penalties.

Read our full Navy Federal business loans review.

» MORE: Best credit union business loans

Key facts:

• Loan amounts up to $500000. 

• Approval in as little as one hour. 

• Terms ranging from 24 to 60 months. 

Read our full Balboa Capital review.

» MORE: Best same-day business loans

Key facts:

• Amounts up to $500,000, though you may be able to get more.

• Terms ranging from 24 to 84 months.

• 60-day rate lock guarantee.

• Same-day funding available.

• Rates start at 5.99%.

Read our full JR Capital review.

Key facts:

• Terms up to 72 months.

• No loan or leasing maximums. 

• Minimum credit score requirement: 550.

• Rates start at %7.5.

Key facts:

• Amounts between $5000 and $1 million. 

• Terms ranging from 24 to 84 months.

• Fixed interest rates.

Compare the best business auto lenders

» MORE: Can you get a business loan with no credit check?

How I worked on this guide

To update this guide to business auto loans, I spent three days researching lenders that offer financing for business vehicles. I scoured lender websites for information on loan terms, eligibility requirements, vehicle restrictions, interest rates and more.

When I couldn’t find information online, I called and spoke with lender representatives directly to get the details I needed.

Per NerdWallet’s editorial guidelines, I reviewed each lender with editorial independence. That means I assessed lenders based on their individual merits and without consideration to any business relationships they may or may not have with NerdWallet.

As a former small-business owner myself, I approached my research from the vantage point of an entrepreneur, including the details that matter most when trying to finance company vehicles.

What is a business auto loan?

A business auto loan, also known as a commercial auto loan or business car loan, is financing you can use to buy a vehicle for your company. These loans typically cover cars, vans and some trucks. You’ll likely need an equipment loan or commercial truck loan for a heavy-duty vehicle.

A business loan from a bank will typically have the lowest rate. If you already have a business account with a bank, start by seeing what rate it will offer you on a business auto loan. Alternative lenders may charge more, but their vehicle loans can make sense if you can’t qualify with a bank or need funding quickly.

How to get a business auto loan

1. Find the right vehicle. This means not only the type of vehicle that fits your business’s needs, but also one a lender will approve. For example, if you want to finance a used car, many lenders will have specific mileage limits and won’t approve a vehicle that’s more than five years old due to the depreciation.

2. Compare offers. If your company has a relationship with a financial institution, it can make sense to see if it offers business auto loans. But as with other types of business loans, you may find lower rates by shopping around. Look at a lender’s APR and details like how much of the total cost you can finance. If it’s less than 100% of the vehicle’s total cost — don’t forget expenses like taxes and registration — you’ll need more cash on hand.

3. Apply with a lender. Lenders have different application procedures. The process may be time-consuming and require paperwork like a business license, business tax ID and information about all the business’s owners. If you’re in a rush, alternative lenders may offer a more streamlined application process, but are also more expensive.

Business auto loan rates

Business auto loan rates vary depending on factors like the applicant’s income, personal credit score, time in business and length of financing term. Because business auto loans use the vehicle itself as collateral for the loan, the age and condition of the car may also affect the rate you get.

Banks and credit unions typically offer the best rates, but they can be tricky to qualify for. Rates can range between about 4.09% and 14% depending on several factors. Alternative lenders, on the other hand, may be easier to qualify for, but charge higher rates.

» MORE: How to finance used equipment

Business auto leases vs. loans

Lenders may offer both business auto leases and loans. Consider a loan if you want to own the vehicle outright in the long run. However, a business auto lease may make sense if:

• You need to free up cash flow. If you’re worried about fitting a car’s costs into your operating budget, auto lease payments are often lower than loan payments. You may also be able to spread the sales tax over the repayment term, depending on where you live. But you could pay more in insurance, and overall, for a lease.

• You don’t want to be stuck with a car. If having the latest car model is important to your business, a lease gives you the opportunity to switch to a new car at the end of your term You also have options to get out of a car lease — like swapping it for a new one — if the vehicle doesn’t end up fitting your company’s needs.

• You know how you’ll use the car. Your lease agreement will dictate what you can do with the vehicle, both in terms of how many miles you can drive and whether you do simple modifications, like wrap the outside. If you plan to substantially upfit the car, or run it into the ground, buying may be the better option.

» MORE: Car lease calculator

Business auto loans vs. personal auto loans

Business auto loans are similar to personal auto loans — you get money to buy a vehicle and repay that amount plus interest over a set term. But there are some notable differences with a business auto loan:

• The vehicle is for business purposes. Small-business owners’ personal and professional lives often blur, but business auto loans are meant for vehicles used by your company. When you apply, the lender will likely ask how you’ll use the vehicle and you may need to provide documentation like a business plan or company financial statements.

• The vehicle can be in your business’s name. For qualified borrowers, some lenders will let you put a business auto loan in your company’s name only. This can protect your personal credit or assets should your business be unable to repay the debt. In other instances, you’ll need to provide a personal guarantee for the loan as collateral.

• Potential tax deductions are available. If you buy or lease a business vehicle, you can deduct its ownership and operation costs. Owners can also deduct a car’s depreciation. There are multiple ways to do this; using the standard mileage rate, actual expenses or possibly Section 179 of the tax code could allow the entire deduction all at once, though that amount varies based on factors such as vehicle type and when it was placed in service.

» MORE: Semi truck loan calculator

Alternatives to business auto loans

In addition to a business auto lease, other alternatives to business auto loans include:

SBA loans

SBA commercial vehicle loans are loans issued by private lenders but backed by the federal government. They include SBA microloans, 7(a) loans, Express loans and 504 loans, most of which can be used to purchase a vehicle, as long as its use is for business purposes. SBA loans offer competitive rates and low fees, but can take a while to fund.

Lines of credit

Business lines of credit are revolving sources of capital that can be used to purchase a vehicle for your business. With lines of credit, you only pay interest on the money you’ve used, and you can redraw what you’ve paid back. Business lines of credit are offered by banks and online lenders, and online lenders usually offer the easiest approval terms.

Depending on the type of vehicle you need to finance, a line of credit may not cover the full amount — business credit lines typically hover around $100,000 to $200,000. Certain types of businesses may qualify for an SBA line of credit up to $5 million.

Consumer auto loans

If you can’t qualify for a business auto loan or your vehicle will be driven mostly for personal use, consider a consumer auto loan. This won’t come with benefits like building business credit, but personal auto loans are widely available, even if you have bad credit.

Personal business loans

You can typically use the proceeds from a personal business loan on whatever your company needs — including vehicles. But these loans will likely be more expensive than any other business auto loan option, making them a last resort for financing a vehicle purchase.