There is no denying that companies that buy a car is less expensive solution than reimbursing employees for driving their own vehicles. Unfortunately, although it may seem otherwise, qualifying for a loan and eventually buying a vehicle under a business name tends to become much more challenging than it would be if you qualified for a personal loan. Still the things are as they are, and the only thing you can do to make this exhausting situation more bearable is to be well prepared. Let us take a look at some of the steps you should take to make buying a car under a business name as easy as it gets.
Before You Buy a Car Improve Your Business’s Credit Rating
Much like the personal credit lenders, business lenders will be much more eager to loan their money to the applicant with a good credit rating, and much like individuals businesses can also build that credit rating by paying off their bills and debts on time. There are, however, few other things that can help this cause:
- Apply for a small loan. Small loans are not only easier to pay off, they are also the ones that can be paid off much faster, so you do not have to wait forever for your business’s credit rating to go up.
- Apply for a line of credit. Credit cards are, without any doubt, one of the easiest ways to quickly build a credit rating up, no matter whether we are talking about a business or an individual. Just make sure that you are able to make your payments on time.
Develop a Stable Business
Other than credit ratings, the thing that loan lenders will be interested in the most are your company’s business records. Based upon them, the lenders will be able to determine is your business profitable enough to timely repay the loan you have applied for. Do your best, then, to use the time you have intended for building up the credit rating to sort out your business’s finances, and cut all the unnecessary costs, too. It should also not be a bad idea to put some of your potentially risky moves on hold until the loan is approved.
Prepare the Loan Proposal
Essentially, the loan proposal is the way you are going to pitch the loan to the lenders. Make sure to make it as thorough, polished, and professional as possible. Here are some of the topics a good proposal should address:
- Business Description
- Management Experience
- The State of Your Personal Finances
- Purpose of Loan Request
- Requested Amount
- Down Payment Amount
- Repayment Strategy
- Other Applicable Items (leases, letters of intent, etc.)
- Marketing Strategies
- List of Collateral
It would be wise that, in addition to the proposal, document all the people who are going to use the vehicle and for what purpose. Also, you should mention, at some point, how and where do you intend to buy a car (car auctions, used-car lots, car shops, etc.), to make yourself appear even more transparent and trustworthy.
Narrow the List of Lenders
Of course, the fact that you are applying for a loan does not mean that you should settle with the first offer you stumble upon. Various lenders offer various rates and terms, so you should make a list of at least three of them that suit you the best and start the application process there. If their best interests do not coincide with your best interests, you can always revisit the list of lenders you have written off, and try to find the middle ground with some of them.
Once you go through all of these steps your loan should be approved, and you are finally going to be able to buy a car your business needs. And once you repay the debt, getting the next loan will be much easier endeavor.