How to Buy a Car With Business Credit

by Duncan Jenkins ; Updated July 27, 2017

Commercial credit allows a business owner to borrow against his business rather than his or her personal credit file. Also, business credit eliminates personal liability from the contract, which protects the borrower's personal assets. You can use business credit to buy a car.

How to Buy a Car With Business Credit

Step 1

Establish a credit history for your business by running a strong, profitable business. Keep an eye on expenses and the bottom line, and invest to ensure sustainable growth.

Step 2

Secure smaller lines of credit. A car loan is considered secure (as it is tied to a piece of property) and therefore tougher to obtain. Small businesses (especially sole proprietorships) often have a better chance of obtaining credit cards first because the documentation process is less rigorous. (You will need a Federal Tax ID to obtain business credit of any kind.)

Step 3

Manage your business debt. Use the credit card(s) but only for items you can afford and pay off every month on time. By doing so, you create a positive credit portfolio for your business. Keep your outstanding balances well below the limit (no more than 50 percent). Apply for credit line increases after establishing a small credit history.

Step 4

Research lenders who offer commercial credit. The restrictions vary from lender to lender. Some will extend credit to businesses with limited credit histories, but be prepared to pay more in fees and interest. If you have several years of good credit history first, you will avoid the highest fees and rates on a car loan.

Step 5

Contact several lenders who work with auto dealerships and request several offers for financing. Be prepared to surrender all business documents—especially those related to the financial health of your business. Pull a copy of your business credit report, and be ready to defend any blemishes.

Step 6

Choose the loan offer that best meets your business' goals and provides the most reasonable rate.

About the Author

Based in Eugene, Ore., Duncan Jenkins has been writing finance-related articles since 2008. His specialties include personal finance advice, mortgage/equity loans and credit management. Jenkins obtained his bachelor's degree in English from Clark University.