Emergency Business Vehicle Loan with Bad Credit

If you need vehicles to effectively operate your business, finding a business vehicle loan for your business can be essential. This is especially important if you need an emergency loan to buy a new car or truck for your business. But what if you have bad credit? There are alternative funding options that you can get that will give you the fast cash that you need to buy vehicles for your business. By reading on, you can learn more about commercial vehicle loans and your options if you have bad credit.

Understanding Commercial Vehicle Loans

The first thing to take a look at is what business vehicle loans are. These loans are specifically made for businesses to purchase the trucks or vehicles that they need to run their business. If you need to increase your cash flow or working capital by buying a vehicle, this is the best option for you. These loans are offered by traditional lending options like banks or credit unions, or through alternative lenders.

When you go through the process with a traditional bank, this can be a lengthy process that does require a lot of time and documentation. Before going through this process with a traditional bank, you should know exactly how much you really need for your vehicle purchases as well as how much you can reasonably afford.

To get a loan, you may need the following for this process:

• Tax returns
• Partnership agreements
• Driver’s license
• LLC documents
• Employer Identification Number (EIN)
• Business license
• Profit-loss statements
• Cash flow statements
• Bank statements

Now that you have all of this information together, you can begin the process of getting a commercial vehicle loan.

Finding a Commercial Vehicle Loan

Generally speaking, it’s usually cheaper if you get specialized funding for the vehicle. The issue that you may have is finding loan products that are specifically made for commercial vehicle loans. However, you can just get traditional funding though you will need to expect to pay significantly more in interest this way.

Before you start the process of getting a vehicle loan, there are some things that you can do to find out the best loan option for your needs.

Try to Boost Your Credit Score

More specifically, you should be focused on improving your business credit score. Just by looking at your credit score, your application for a loan may be denied especially when you go to a traditional lender. Even if you are choosing to go with alternative financing, it’s a good idea to boost your business credit score so that you can get more favorable interest rates. This will help you pay less overall on your loan.

Determine What Your Business Credit Score Is

You always want to know what to expect when going into this process. You don’t want to go into any process of getting a loan without having an idea of what your credit score is. Otherwise, you’re giving all of the power to the lender. This will give you a good place to negotiate with a lender. Many businesses believe that their credit score is much lower than it actually is, but with a higher credit score you can get more favorable terms.

Figure Out How Much Financing You Need, But Don’t Forget to Haggle

If you’re like most people, you never want to pay full sticker price for a vehicle on your own so why would you settle for sticker price for a company vehicle? Work your magic and haggle for a better price. Once you get a reasonable price, then you can decide how much you will need for your financing. You should have a number in mind for how much you are willing to reasonably spend for the vehicle after doing extensive research.

Should You Get Financing Through the Dealership or with Direct Lending Options?

Direct lending options include options like a traditional bank or alternative financing lender, whereas a dealership often has their own financing you can choose. So which option is the best option? You really need to do your research to figure out which one is the best one for your specific needs. You may even be able to use the terms of one option to negotiate better terms with the other option, which is why doing your research is important.

Don’t Get Blinded by Lower Monthly Payments

You may end up with a lower monthly payment, but at what cost? If you are getting a lower monthly price, that means you are getting a longer term for paying off the loan. This means that you are paying more in the long-term. When you let the dealer focus on the monthly payments, you may be blinded by this rather than the total cost of your fleet. You should always be focused on the bottom line.

Don’t Get Unnecessary Add-Ons

Much of the profits a dealership earns comes from these little extra add-ons, such as paint sealant. You can often times get these add-ons later on much cheaper from another place. You should also be sure that you closely look over the paperwork before you sign to make sure that they didn’t sneak anything extra in as well.

Be Aware of Relevant Laws

There is legislation that can impact you when buying a new vehicle at both the state and federal level. One of the most important ones to know is the Truth in Lending Act, where the creditor is required to disclose the important aspects of the loan agreement including the APR, due dates for payments, and any late fees for late payments.

Can You Get a Commercial Vehicle Loan with Bad Credit?

You can get a commercial vehicle loan even with bad credit when you choose to go with an alternative lender rather than the traditional lenders. This is because alternative lenders tend to look at a wide variety of different factors when deciding whether or not to loan money to a business. For instance, they will heavily look at factors like cash flow and earnings from your business. When the business generates a lot of revenue, the lender will be more likely to work with you no matter what your credit score is. If you do have bad credit, this just means that the lender will ask for collateral or offer higher interest on the loan.

A common question when you purchase a vehicle with a commercial vehicle loan is whether or not you actually own the vehicle. The lender will be listed as a lienholder on your title until the point that you pay off the loan. If you miss payments or the loan goes into default, they can repossess the vehicle. When you have paid off the vehicle, the title will be transferred to you, and you will have full ownership of the vehicle.

If you have decided to go with the alternative financing route for your commercial vehicle loan, there are a couple of different options that you can consider if you have bad credit: Equipment financing and leasing.

Equipment Financing

Equipment financing is made to help businesses get the equipment that they need to operate their business. In this case, the equipment financing will help you pay for your new vehicle or fleet of vehicles. There are loan options for up to 10 years. This can be a great option that offers similar terms and requirements as traditional loans.

Leasing

Sometimes leasing can be another option for businesses who have bad credit, especially if you are unable to get the equipment financing loan. Leasing does allow you to immediately address the needs of your business while also helping you to build up your credit so that you can get more favorable terms and options later on for additional vehicles or other funding that you may need for your business.

Buy or Lease: Which is the Best Choice?

One of the biggest things that you need to consider when getting an emergency business vehicle loan is whether you want to buy or lease the vehicle. Each of these options have their benefits and downsides to consider before deciding on one of these options. The biggest difference between these options is that with one you will be able to pay it off and have ownership of the vehicle while the other means you never own the vehicle and can count it as an asset. This section will take a closer look at both of these options.

Buying

If you want to have your vehicle for a long time and consider the vehicle as one of your business assets, then buying the vehicle is the best option if possible. Buying the vehicle can be more cost-effective down the line than leasing and you don’t have to worry as much about things like wear and tear.

Here are some things to consider with buying:

• Might need a down payment
• No limits on mileage, but high mileage depreciates car faster
• Have the option to sell the vehicle or trade it in
• Longer repayment terms / higher payments
• Depreciation can reduce value of the car
• Can qualify for depreciation tax

Leasing

If you can’t get an auto loan or if you want to frequently upgrade your vehicle, then leasing may be a better option for you. However, leases can be much more expensive than loans especially if you want to buy the car after the leasing period is over.

Here are some things to consider when leasing:

• May or may not require down payment, but may have to pay security deposit and first month’s payment upfront
• Mileage limits, which incur additional fees for exceeding
• Can buy or return the vehicle after lease is over
• Lower monthly payments / shorter monthly terms
• Can get new vehicle after turning in the vehicle after leasing period
• Leased vehicles can be tax-deductible depending on expenses and mileage

Should I Buy or Lease?

The answer really depends on what your specific situation is. You may find that buying a vehicle is the best option or that maybe leasing is a better choice depending on your needs.

Conclusion

Your business needs vehicles to operate, which is why being informed about your vehicle loan options can be crucial to success. A common misconception is that you can’t get the vehicle loan that you need because you have bad credit. Fortunately, you do have options to get the loans that you need to help your business succeed no matter what your credit is. The advice here can help you through this process of getting a vehicle loan, even with bad credit.