How to Get a Business Car Loan
In the world of business, attaining a car loan is relatively similar to a personal loan but here the company is entitled to give assurance to the lender regarding the mode of payment. Many businesses need commercial vehicle loans as it leaves a striking impression on their overall images. Furthermore, purchasing a vehicle for business use can lead to a tax exemption.
Before applying, there are certain necessary steps you should take into account.
Instructions
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Firstly, have your business rating assessed from a reputed credit agency as it will give you a clear picture about where your business stands. If your company is new, then the lender may look at your personal credit history before meeting your demands. In such cases, you may need to sign a personal guarantee that you will not default on the payments. Hence, get your personal credit rating checked.
Devise a loan proposal which gives a full insight to your business, and why you need to have the car financed. Ensure that you mention your payment methods as the lender will also require specific collateral against the loan taken. Also figure out the overall affordability of the acquisition. -
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Now that you have sorted out your loan proposal plans, the next task is to search for the best available option which matches your business requirement. Rather than going directly to a bank or a loan officer, try searching online for the best rates, which ensures that your credit rating does not get affected. In such situations, however, try out the same bank or the lending institution you have worked with in the past as they may hand out better rates.
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Be aware of all the hidden charges. Sometimes lower rates are unfavourable as they are certain fees that mount up to a considerable amount. Decide on the duration of the contract by exploring all possible options. Sometimes longer-term payment methods may appear appealing but are not entirely beneficial. Having said that, do not complicate yourself as the lending institutions’ basic purpose is to make profit.
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Decide on whether you want a flexible or a predetermined rate. As the time span for the payment will range from two to five years, you need to do your homework on the prevailing conditions of the economy. If you expect the interest rates to come down after a certain period of time, go for a flexible rate or if you believe that the current rate will remain for a considerable duration, opt for a fixed loan rate.
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Do consider the option of multiple purchases if you think that it will be necessary for your business in the long run. Buying in bulk will force the bank to make concessions.
