Business Auto Loans: The Top 3 Options, Reviewed

Learn about the top three business auto loans for small businesses.
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Business Auto Loans: What You Need to Know

A business auto loan is a specific form of equipment financing that allows you to access low-cost capital to invest in cars or trucks, which will function as collateral for the business auto loan itself. This self-collateralizing setup makes business auto loans without personal guarantee requirements that much easier to find.

If you need to access an automobile for your business—whether a car for traveling, a truck for lugging, or a bus for touring—a business auto loan is a top choice for subsidizing this investment. In fact, small business loans for automobiles come with some of the most affordable interest rates and longest repayment terms on the market.

We comb through all the details on small business auto loans to help you decide whether or not they are the right move for your business.

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Business Auto Loans: Your Top 3 Options

If you’re thinking that a business auto loan is exactly what you need to rev up your small business growth, then you’ll have to find the right small business auto loan lender for you needs and credentials.

Let’s take a look at your top three lenders to consider during your search for an auto loan for your business.

1. Balboa Capital

Balboa Capital offers business auto loans ranging from $2,000 to $500,000 with business auto loan interest rates as low as 3.99% and repayment terms as long as five years. To be eligible for a business auto loan from Balboa Capital, you’ll need personal credit of 600+, at least a year in business, and at least $100,000 in annual revenue.

If you’re looking for affordable small business auto loans of no more than $500,000, then Balboa Capital could be your very best bet.

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2. Currency Capital

If you’re looking for small business auto loans that come in larger amounts, then consider Currency Capital as a top option. Currency provides business auto loans ranging in size from $5,000 all the way up to $2 million. Currency Capital business auto loan interest rates can dip as low as 6%, and repayment terms can stretch as long as seven years. If Currency Capital’s larger, longer-term business auto loans sound right for you, you’ll need to have a personal credit score of at least 620 and at least $120,000 in annual revenue to be eligible.

3. Crest Capital

The final of our picks for the top three business auto loan providers is Crest Capital. This lender has one of the best reputations in the business, and offers business auto loans ranging from $5,000 to $500,000. Crest Capital auto financing will come with ranges no shorter than two years and as long as six years, with business auto loan interest rates as low as 5%.

You’ll simply need personal credit of at least 650 and at least two years in business to be eligible for this business auto loan lender, but if you check off those boxes, Crest Capital could offer up your best business auto loan deal.

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Business Auto Loans 101

You have a quick list of the best lenders offering loans for business vehicles, but let’s nail down some of the fundamentals of understanding how this form of equipment financing works.

Here are the basics on small business auto loans and what taking one on would look like for your business.

Business Auto Loan Interest Rates

As with most forms of equipment financing, with business auto loans, you’ll be able to access some pretty stellar interest rates, because the automobile itself will act as collateral for the funding Business auto loan interest rates can dip as low as 3.89% if you’re accessing funding through a bank. However, if you decide to go with a non-bank lender for their quick and accessible business auto loans, then business auto loan interest rates will start at 8%.

Business Auto Loan Amounts

Through business auto loans, you can access up to 100% of the value of the automobile you hope to purchase with the proceeds. Business auto loan lenders will typically put a dollar amount cap on their loans, but this will fluctuate based on which lender you choose to work with.

Business Auto Loan Repayment Terms

With almost any small business auto loan you come across, you’ll be repaying your business auto financing with monthly scheduled payments. And small business lenders will schedule out a repayment plan that will have you paying these monthly sums throughout the projected life of the automobile you purchase with the loan proceeds.

Provided that your automobile collateral is still worth something, you business auto loan provider won’t be too worried about getting their money back quickly. If your collateral is still worth something, your lender is working with very little risk. As a result, the repayment term lengths for business auto loans are petty ideal, and they often stretch as long as six years.

Business Auto Loan Requirements

Finally, because business auto loans are a form of secured funding, they’ll have more manageable requirements than their unsecured alternatives. Based on the customers we fund with business equipment financing, you’ll be in the running for a business auto loan if you have a FICO score of 630+, at least two years in business, and at least $130,000 of annual revenue.

Plus, because the automobile itself will be securing the business auto loan you take on, finding a business auto loan with no personal guarantee requirement will be pretty simple. Most lenders ask for a personal guarantee in place of collateral, so many business auto loan lenders won’t necessarily require that you provide a personal guarantee for your debt with them.


Small Business Auto Loans: The Advantages

Having taken a look at your top options for small business auto loan lenders, let’s now consider the most notable features of small business auto loans. First, we’ll start with the positive and focus on the most notable advantages of taking on an auto loan to grow your small business.

Lengthy Repayment Terms

With business auto loans, you’ll be able to qualify for longer repayment terms than you would normally be able to qualify for. Because the collateral that’s built into business auto loans makes this form of funding less risky for lenders, they’re willing to give you more time to pay down your debt gradually. Longer repayment terms mean that your monthly scheduled payments will be less condensed and, as a result, much easier to afford.

Lower Interest Rates

For similar reasons, small business auto loans will come with lower interest rates than your business would normally be able to qualify for. The automobile or automobiles that secure business auto loans make it more likely for the lender to recoup the value of your debt, even if you have to default on your loan. As a result of this mitigated risk, lenders are willing to charge you less interest than they would for unsecured business funding.

Built-in Collateral

The final, most notable advantage to small business auto loans is the reason for the first two that we name—business auto loans have longer repayment terms and lower interest rates thanks to their self-secured nature. Business auto loans have collateral built into their model, so you or your business won’t have to provide outside collateral to access better rates. The only thing needed to provide to secure your loan is the automobile that you purchase with the loan proceeds, no real estate or personal assets necessary.

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Small Business Auto Loans: The Disadvantages

However, for all of their virtues, business auto loans can come with a few notable downsides. Be sure to keep these following two downsides in mind before you move forward with taking on a business auto loan.

Potentially Obsolete Automobiles

One thing important downside to note about business auto loans before taking one on? Because small business auto loan providers typically base their repayment terms on the projected life of a piece of automobile, you’ll likely end up with a piece of obsolete machinery once you’re done paying down your business auto loan. Business auto loan lenders aim to make sure that you’ve paid off your debt to them while the automobile in question retains any worth. So, when you square off your business auto loan, you might find yourself stuck with a big hunk of metal.

If you’re worried about ending up stuck with an obsolete automobile, consider leasing for your business instead of financing a full-on purchase.

Still Tough to Qualify For

Additionally, even though business auto loans will be slightly easier to qualify for because their self-secured nature mitigates some of the risk that a lender takes on by lending to you, they are still pretty tough to qualify for. Most business auto loan lenders will require at least a year of business history to be eligible to fund with them. Plus, you’ll often need solid personal credit to be eligible to access a business auto loan. If you’re running a new business, you’re working with average personal credit, or both, then business auto loans might not be an option for your business.


Business Auto Loans vs. Business Auto Leasing

You might be considering leasing an automobile for your business instead of financing a purchase with a business auto loan. Both will have their respective merits, but be sure to note that you won’t ever own the car or truck if you’re leasing it. As a result, you won’t be able to consider any auto you lease an asset when calculating your business’s worth. Meanwhile, a business auto loan will allow you to own your car or truck, while also paying it down gradually.


Business Auto Loans: The Bottom Line

If you’re interested in seeking capital for purchasing an automobile—be it a car, truck, bus, or RV—for your business, then you should seriously consider making business auto loans work for you. They won’t require outside collateral, and they come with some of the most ideal terms of any business loans on the market.

However, if you’re not determined to own the automobile you need for your business, then take a moment to consider leasing as an alternative—the repayment term lengths for business auto loans are so lengthy, your monthly payments will be affordable, but you might end up with an obsolete fleet by the time you’ve paid down your debt.