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Business Loans For Automotive Industry

  • Get finance from £10000 to £250,000
  • Lower rates for new & used vehicles
  • Maximum tax-deductible options
  • Qualify for more than one loan deal
  • Automotive loan for a maximum of up to 7 years

Comparing business finance for automotive? Talk to us

Many small businesses want quick access to vehicles like cars, trucks, or other commercial vehicles to grow their business further. At the same time, buying a new or used vehicle can be expensive, mainly when calculating the tax connotation. You want to get the best rates available on business finance for automotive sectors, which allows maximum savings your way.

Many UK lenders provide business finance to companies in the automotive industry. They can finance automotive businesses by getting a small amount or a complete financial solution your business needs for a vehicle. When buying a single or two business vehicles, many options exist, such as asset finance that also includes products like truck financing.

If your business relies entirely on vehicles, an automotive loan can be a reasonable way to buy your desired vehicle, like a car, van or truck. Besides, you can also refinance the existing vehicle, which can also save you money. More importantly, your vehicle will itself act as the loan collateral. Qualifying for this business loan is much easier than any other option. You may not need to bring a personal guarantee to secure the loan, but it depends upon the lender you choose.

automotive-loan

Flexible automotive finance is available for the following types of vehicles and related assets:

  • Trucks
  • Equipment
  • Construction
  • Trailers
  • Pick-up trucks
  • Cars
  • Vans
  • Agriculture
  • Earthmoving
  • Other vehicles

Compare options at Thebusinessfunds to find the most suitable loan option with affordable interest rates. We are a specialist automotive business loan broker suggesting over 50 lenders providing such business finance. You can choose any of those lenders and get the benefits like:

  • No impact on credit score
  • Higher loan approval rate
  • No restriction on the type of vehicle

What are business loans for automotive businesses?

A loan for an automotive business is a funding product you can obtain to purchase a vehicle for your company. It is also called a commercial auto loan or business auto loan. These loans usually finance cars, vans, and trucks. If you need a heavy-duty vehicle, opting for an equipment loan or a commercial truck loan will be better.

The functioning of an automotive business loan is relatively similar to a personal vehicle loan. Once applied and approved, you receive money to buy a commercial vehicle and repay the sum alongside interest rates over a settled term.

Here are some standard features of an automotive loan for business:

For any business purpose: Small business owners can use the borrowed amount for their commercial use. It means you can use these loans for any type of vehicle the company uses. Lenders may ask you about the loan use and related documents.

The vehicle will be in your company’s name: Since you want to purchase a commercial vehicle, it will be in your business’s name. However, you need to qualify your business first for an automotive loan. Doing this can prevent your personal assets from being used as loan collateral.

Possible tax deductions: You can get significant tax deductions depending on the type of vehicle you want to buy. It primarily happens with the purchasing or leasing of vehicles for business purposes. The business owners can also subtract the depreciation of the vehicle.

What are the preconditions for a loan for an automotive business?

Availing of a business loan involves a proper process that every venture needs to pursue. Here, the first step is to make your business eligible by fulfilling the conditions to get funding for automotive businesses. Different lenders have different criteria, but generally, the following prerequisites are there to qualify your business. These are:

Taxpayer of the UK: Your Company must be registered and has been operating for at least one year in the UK. Lenders may ask you to share tax statements while considering your application.

Vehicle for business activities only: Once the automotive loan is availed, you should use the purchased vehicle for business purposes only. No lender will allow you to use the vehicle for personal use.

You must be running a profitable business: Most automotive loan lenders want to fund only profitable businesses. They do so to ensure the proper repayments throughout the life of the loan.

A good business credit score: A decent credit score for your business is always a guarantee of loan approval and fund disbursal. You will also get lower interest rates as there is no risk for the lender involved. However, some lenders can offer funding despite a lower credit profile.

You must meet all these qualifying criteria and prepare to initiate the loan application procedure. Are you ready? Have you collected all the documents required before applying? If not, then collect these papers immediately:

  • Cash flow statements
  • Tax returns
  • Business Ownership
  • Assurance of loan repayment
  • Financial or bank statements
  • Insurance papers
loan-application-procedure

You should have a reliable lender who can understand your financial compulsions. The lender should be able to offer you the desired loan amount and term as per your business needs. First, know the final price of the vehicle you want to buy, and then decide how much you need to get from the lender.

How advantageous is finance for automotive businesses?

As your company belongs to the automotive industry, you will need a car, truck, Ute, or van for your commercial purposes only. The primary thing is getting the vehicle in your company’s name. Therefore, you can opt for secured business loans for automotive businesses to cover the actual vehicle cost. You can keep that vehicle as the loan collateral and get higher amount at lower interest rates.

There are a few lenders in our panel who can provide unsecured loans for business. These may not require your company’s asset to pledge but carry a higher interest rate on probably the lower loan amount. These work best when you need a quick cash injection or fill the funding gap during a more considerable expense.

There is no fixed interest rate to consider, as the varied lenders have their conditions. Some may charge fixed rates, while others keep variable interest costs. Simultaneously, depending on your requirements, you can get funding for a new or used business vehicle. Most automotive companies prefer fixed interest rates and regular monthly instalments. It gives them leverage to keep focusing on regular business activities. Analyse your business banking and its capacity.

You should be clear about how you will utilise the vehicle. For example, you have to travel extensively, as your company is part of the UK hospitality sector. It is always beneficial to find out a flexible automotive finance lender who will allow you to trade in the vehicle on lease and save on maintenance expenses.

Comparing different options at Thebusinessfunds can help you decide the right option that is beneficial for your business. We act as your trustworthy automotive business loan broker and finds deals which should have following benefits:

  • You will get significant tax benefits while opting for this specialised business funding. You get these from the final purchase price to interest charges levied on the vehicle financing.
  • We vouch for discovering only those loan deals which ensure competitive interest rates, which you can afford as per your business returns.
  • Our panel of lenders have mostly fixed monthly repayments, and you can also choose their automatic loan repayment to keep a proper financial balance;
  • Do you need a maximum loan term? We will find only those loan offers where the loan term fits your business budget. You can opt for a maximum of 7 years.
  • The lenders we suggest also have the benefit of balloon payment. It allows lower monthly instalments at the end of the loan term. It means you can focus more on the regular cash flow.

What are the different automotive loan options?

We have a comprehensive panel of lenders in the UK with features like responsible lending and supportive norms. They have experience helping automotive companies ensure stable cash flow and seek significant growth.

There may be different reasons to get commercial finance for automotive businesses. We help you to be familiar with diverse loan options, which are mentioned below:

  • Working Capital Loans

    You should have a stable and robust working capital, irrespective of the size of your automotive business. It strengthens your business returns to manage expenses related to bills, equipment, payrolls and rent. By getting a valuable deal on working capital loans, you can fill any funding gap and repay the borrowed amount within a shorter period.

  • Invoice Finance

    Most automotive companies struggle with unpaid and unclear invoices. They need to chase the providers, which will take time. You may also get a sudden block to your cash flow and the chances of fulfilling the new projects. Finding a perfect deal on invoice finance can help ease the stress of unclear payments. Our lenders may finance your company up to 95% of your pending invoices.

  • Trade Finance

    A trade finance deal is always lucrative for the automotive industry, particularly the manufacturing sector. You can secure a reasonable amount against the orders that you have bought. It further brings the necessary funds to make the suppliers' payments, and your company can make the orders on time. We already have a list of trade finance providers who are flexible in funding for automotive businesses.

How does business finance for the automotive sector work?

Contacting an automotive business loan broker will bring solutions quickly. You can easily choose the lender for your automotive finance and accomplish what you desire. Once you decide on your loan provider, you have to follow specific steps to embellish the loan procedure.

Step 01: Analyse your business needs and decide a loan amount

It is vital to analyse your business needs, such as which type of vehicle you should buy, whether it will be used or a new one, and how you will afford the loan repayment. You can also use the loan calculator to analyse the manageable payments properly. Some companies want more than one vehicle depending upon the working and their size. The prime examples are the transport and logistics businesses. Whatever your requirements, you should seek an affordable loan amount to repay.

Step 02: Know your credit file ready

The next step is to prepare your credit score file and be ready to share it with the lender. Some business finance providers ask for both business and personal credit scores. Doing this will allow the lender to decide the approval, interest rates, and duration of the loan. To check your credit score, you can approach any credit reference agency. If errors occur, hold the loan application and discuss with the credit bureau to fix the mistakes. Things will be comfortable with a good credit score. Otherwise, you must arrange a personal guarantee if your credit score is low.

Step 03: Decide the type of the vehicle

Your company is part of the automotive sector, and thus, you should be clear about the type of vehicle you need. You can choose between standard vehicles and specialised vehicles such as pick-up trucks. Evaluate your current business requirements and then decide the type of vehicle. This step also determines the type of business finance for the automotive sector. If you are buying a used vehicle, ensure it is not older than five years.

Step 04: Apply for an automotive loan

Once you have completed all the steps mentioned above, you are ready with your loan application. It would be better to opt for online loan applications as it will allow you to process things quickly and focus on regular business activities. Lenders require some documents from the applicants, mainly business information like tax returns, licenses, address proof, the total number of employees, and the type of business. Some need personal information such as bank statements, ownership, etc.

Step 05: Finalising the loan agreement

The lender analyses your loan application and details and then approves it if everything goes well. It will send a loan agreement, which you should review, along with the terms and conditions. Ask the lender to clarify anything if you have any doubts. Otherwise, sign the loan agreement and get the desired amount to your company's bank account. Be sincere from the first repayment till the end.

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FAQs

What should you look for when comparing automotive loan options?

No one can deny the importance of comparing different deals on commercial finance for automotive businesses. It is vital to pick the right one that suits your business needs. Here are the things you should compare:

  • Your priority is to compare the interest rates of different lenders;
  • The lenders charge any fees, such as administration, establishment and pre-approval fees;
  • You should check loan terms offered by varied automotive loan lenders and choose the best one in which you can quickly repay;
  • You must ensure your business cash flow and then share your repayment plan with the lender.
What are the alternatives to business loans for automotive businesses?

A few alternatives are available in the UK market when a business looks for an automotive loan. These include:

Short-term business loans: You can opt for a short-term loan to purchase your commercial vehicle. However, you get a small amount to borrow, which applies to the vehicle cost only, not to other business expenses.

Typical business loans: Some small businesses also opt for standard business loans to fulfil their need for a commercial vehicle. It can be a good deal, but these loans are more expensive than specialised automotive loans.

Auto loan: Many lenders offer auto loans to businesses belonging to the automotive industry. You can seek their necessary funds, but you must go through their terms and conditions and compare them with specialised automotive loans.

Are there any affordable deals available for electric vehicle financing?

Yes, we communicate with a few lenders who provide discounted costs when financing electric vehicles for the companies. If you have the exact requirements for your business, you can share them with us. Besides finding new and reliable lenders, we can negotiate with them to ensure maximum benefits for you.

How are the automotive business loan rates determined?

As usual, automotive business loan rates are decided on several factors. For instance, lenders tend to look at your company's profile, duration in business, whether you opt for secured or unsecured loans and the age and type of vehicle you need to buy for commercial use.

You will also have the choice of fixed and variable interest rates. In general, the fixed rates on secured automotive loans can be around 3.5%, as advertised by the lenders, while unsecured business loans for automotive can cost you around 13%.

What are the disadvantages of loans for automotive businesses?

As with any other business loan, loans for automotive businesses have some disadvantages. You should be careful while comparing deals to whether you are getting a loan regulated by the authority. Therefore, you should read the agreement cautiously and remain under our guidance. Apart from that, if you have applied for secured loans for automotive, defaulting on the loan may cause you to lose possession of your asset.