Home > Auto Loans > Business Auto Loans: Considerations For Borrowers
Business Auto Loans: Considerations For Borrowers |
|
If you wish to finance your company cars, vans, or commercial vehicles, you should go in for business auto loans. These loans are characterized by a fixed payment amount and repayment term. Moreover business auto loans are secured by the vehicles that they finance and the loan proceeds are generally paid directly to the seller. Business auto loans are primarily used for any vehicle that is used for business purposes. The salient features of this type of loan are competitive rates, fast approval, flexibility of loan terms ranging from 24-60 months, and fixed and adjustable rates are determined by loan amount, age of vehicle, term and advance rate. For the convenience of qualified borrowers, interest-only balloon loans on new vehicles are also offered. The other requirements to qualify for business auto loans are business must be profitable, personal guarantees of all principals with 20% or more ownership in the business and acceptable credit histories. Business and personal financial information will be required for credit requests greater than $50,000. Attractive auto loans are now available for people with average credit as these loan payments are normally under $200 a month, nowadays. With the special rates available, auto loans are very useful in increasing your cash flow. If you find out what the banks look at before loaning money and have all your facts ready, you will have no difficulty in getting auto loans. Given below are the various criteria that banks consider for granting these loans. The borrower's ability to repay: If it is an established business, it will have financial statements of previous years from which the growth and profitability can easily be viewed. Even a business that has had low profits would qualify for business auto loans, if it can exhibit its marketing plans to expand into a new market. However, a new entrant into the business field will have the disadvantage of not having a past record of its accomplishments and profits but it can make up for the same by projecting its business planning and a viable marketing strategy that has to convince the lenders about how the business will pay for the auto loans. The credit history of the individual: Since the banks will check the individual's credit score from the credit reports of all the three major credit bureaus and will thus assess the credit worthiness before granting small business auto loans, it would be a good idea to go through all your credit reports and check for any inaccuracies and errors so that the same can be put into the process of rectification at the earliest. Any past due accounts should also be dealt with immediately. Equity: Before giving any auto loans, banks look for any form of equity that the business owner can provide. They expect that the business owner would have invested at least 25% of the total value. An example of this 4:1 ratio is that to borrow $125,000 the owner needs to put up at least $25,000. Collateral: Banks are more willing to invest in a business if there is a secondary escape route for them to be able to recover their money. If a business has collateral, it can easily be sold off to recover the money that the bank has given as auto loan to the business owner, in case of a default in the payment. This facility will naturally give an edge over the business that cannot provide collateral. Experience: If the business is new and it has no experience in its field of activity, the banks will not be very comfortable in giving auto loans to such a business. Since knowledge is power and since it equates to profits in the eyes of the bank, the business owner should try to gain the experience or should plan to hire someone with that experience to run the business. It is essential to follow the above steps but doing that alone might not guarantee you the business auto loan. It would, however, put you on the right path for due consideration of the lenders. |
|
| ------------------------ |
|---|
|
|
| ------------------------ |
|---|
|
|
|
|
| ------------------------ |
|---|
|
| ------------------------ |
|---|
Custom Search
|
| ------------------------ |
|---|
|
|
| ------------------------ |
|---|
Consumer Alerts | About | Bookmark Us | Contact | Espanol | Privacy Statement | Copyright | Terms & Conditions | Financial Widgets | SiteMap
Copyright © 2006 Credit Loan, LLC. 235 APOLLO BEACH BLVD, STE 218 Apollo Beach, Florida 33572 All rights reserved.
Disclaimer: The content provided on CreditLoan.com is for informational purposes only; do not make any financial decisions based on its content. Financial decisions are personal, based on an individual's situation. Consult with a financial professional before making any financial decisions. CreditLoan.com is not liable for your financial actions.
