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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 — or refinance one you already own to save money.
Business and commercial auto loans come with built-in collateral: the vehicle itself. That means they may cost less or be easier to qualify for than other loans, and depending on the lender, you may not have to provide a personal guarantee to secure the debt.
You can use other small-business loans to finance a vehicle, so compare options to find the best fit for you. Here are lenders that offer business auto loans and how to decide if one makes sense for you.
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Small-business bank loans typically have the lowest rates. If you already have a business account with a bank, see what rate it will offer you on a business auto loan.
Bank of America Business Advantage Auto Loan
Best for: Business owners who want time to shop around for a vehicle.
Bank of America offers business auto loans at amounts starting at $10,000 and annual percentage rates (APRs) as low as 6.69%. Loan repayment periods range from 48 to 72 months, and the funds can be used to purchase or refinance cars, vans and light trucks.
If you haven’t found the right vehicle yet, Bank of America locks in your business auto loan rate offer for 30 days. This gives you time to shop around before you commit to a loan.
Ally Bank Business Auto Loan
Best for: Flexible auto leases and no personal guarantees.
Ally Bank offers multiple business auto funding options, including traditional loans and a commercial line of credit for borrowers who want to buy multiple vehicles. Leases can be open-ended with flexible terms or closed-ended with fixed terms. Specific loans for heavy-duty trucks and vehicle modifications, like adding a crane or towing equipment, are also offered.
If you can qualify, Ally offers options to buy or lease the vehicle in the name of your business which could help you keep the debt off your personal credit report and protect you from liability related to the use of the vehicle.
PNC Small Business Vehicle Finance Loan
Best for: Business-use passenger vehicle.
PNC offers financing for new and used passenger vehicles starting at $10,000 with loan terms up to 72 months at fixed interest rates. In some cases, you may be able to finance the entire amount of the vehicle purchase price.
PNC will take your application over the phone or at a PNC Bank branch. In general, PNC likes businesses to be in operation for a minimum of three years, but may have different options for newer businesses.
Truist Small Business Auto and Commercial Vehicle Loans
Best for: Longer loan repayment periods
Truist Bank offers small business loans up to $250,000 to purchase or refinance vehicles such as cars, vans, SUVs and light trucks with terms up to 75 months. It also offers commercial vehicle and equipment loans up to $250,000 but with repayment periods of up to 84 months.
A longer loan term will generally offer a lower monthly payment for your business than a shorter term. This can be helpful for small businesses operating on a tight budget. However, longer loan terms typically have higher interest rates than those with shorter terms.
Navy Federal Business Vehicle Loans
Best for: Best for veteran business owners
Although not technically a bank, Navy Federal Credit Union (NFCU) is another type of traditional lender to consider for vehicle loans. NFCU offers loans to purchase business vehicles and heavy-duty trucks to business members who have been with them for at least a year. It may also be an option for veteran business owners who don’t need to make an immediate vehicle purchase, but can join and wait the required year.
Loans start at $10,000 and can be used to buy or refinance a vehicle. Your business needs to be in operation for a minimum of a year and NFCU would like to see annual sales of $100,000 or more.
Alternative lenders are nonbank financing options. These lenders may charge more, but their vehicle loans can make sense if you can’t qualify with a bank or need funding quickly.
National Funding
Best for: Startups or borrowers with bad credit.
National Funding is an alternative lender with commercial vehicle financing and leasing of up to $150,000. Commercial financing and leasing options are offered for commercial cars, vans, trucks and taxis. Its eligibility criteria are less strict than some other business auto loan providers, allowing more business owners to potentially qualify.
For example, National Funding may be a fit for startup financing as it requires only six months in business. Credit requirements are also more lenient than some other lenders — its minimum FICO score is 575 — making National Funding a good choice if you're exploring small business loans for bad credit.
Balboa Capital
Best for: Same-day funding for commercial trucks.
Balboa Capital is an alternative lender that specializes in equipment financing. It offers financing of up to $500,000 for commercial trucks, semi-trucks, dump trucks, vans, flatbed trailers and other vehicles.
Many alternative lenders provide faster funding than banks, and Balboa is no exception. The lender has an online application, offers approval decisions in an hour during regular business hours and says it can provide same-day financing after approval.
Minimum lending requirements include at least one year in business, $100,000+ in annual revenue and a FICO score of 620 or higher. Loan terms can range from 24 to 60 months, depending on the equipment.
Crest Capital
Best for: Hard-to-finance trucks or specialty vehicles.
Crest Capital is an alternative lender that offers business auto loans from $5,000 to $500,000. Crest Capital can be a good choice if the vehicle you want to buy or lease won’t qualify for traditional funding. Only fixed rate loans are offered with no requirement to requalify annually.
Crest Capital doesn’t have vehicle mileage or age restrictions and will finance vehicles sold by private parties. It considers most new and used work-specific trucks, vans or specialty vehicles, including ambulances, hearses, fire trucks, cranes, boom trucks, concrete mixers, water trucks and other specific-use trucks. Crest Capital does exclude vehicles used as taxis services and transportation company tractor trailers.
A business auto loan — sometimes called a commercial auto 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.
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:
- 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: Car loan calculator
- 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.
- 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 pay less by shopping around. Look at a lender’s APR and details like how much 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.
- Apply with a lender. Lenders will 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 also more expensive 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
In addition to a business auto lease, other alternatives to business auto loans include:
- Small-business loans. You could use funds from a term loan, SBA loan or business line of credit to finance a company car. However, tying up other available working capital like this in a vehicle may not make sense depending on your business’s other needs.
- Consumer auto loan. If you can’t qualify for a business auto loan or your vehicle will be driven more 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 loan. 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.
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