Calling all business owners — big and small! No matter what your business is and what you need to run it, there will probably come a time when you’ll want to have a car that is associated with your business and for business use. The good news is that it’s possible to buy a car under a business name. There are a few steps you’ll need to go through in order to get yourself set up with all the appropriate agencies so you can actually purchase the car. In this article we’ll cover the preliminary process of getting your credit set up and detail how to buy a company car.
How to Manage your Credit Score
Step 1: Establish a credit profile. In order to do this, acquire an Employer Identification Number (EIN) from the IRS and have your information sent to credit bureaus. Basically, this is a way to have the financial practices of your business recorded and translated into the equivalent of a credit score, which financial institutions will use to determine if your business is eligible for a car loan.
Step 2: Acquire and maintain good credit. Just as with a personal purchase of a vehicle, credit tells the potential lending institution that you are responsible.
This means that if you are missing lots of bills and are not taking the proper steps to be financially prudent, you are going to have a very bad reputation in the eyes of a lender. You could be denied for a loan if you are not careful and attentive.
It generally takes some time to build up good credit, but it is possible if you make good choices and have financially sound practices.
Step 3: Figure out your credit score. Once enough time has elapsed since establishing your business, you should be able to locate your credit score. While there are many ways for private individuals to learn their credit score for free, you will probably have to pay for your business credit score. You can reach out to the various credit bureaus, such as Equifax, Experian, and Dun and Bradstreet, to pay for your score.
Buying the Car
Step 1: Figure out the best financing option. You should look around at loan rates to find out which one is going be the best for your business.
You can often get these through the dealership, but you could find a better rate somewhere else. Be sure to compare before you move forward!
Step 2: Visit a dealership that sells cars to companies. Because dealing with a business is different than with an individual, make sure you find a dealership that can support your needs.
Step 3: Pick out your car. Determine what type of car your business needs.
If your business is transporting lots of large items, then you are not going to want a coupe. If you only need the car for transportation, then you probably won’t need a massive gas guzzler. Fitting the car to your needs will save you money and be more efficient overall.
Step 4: Finance the vehicle. With the car in mind, provide all the information that the seller requests.
You may want to contact the dealer ahead of time so you can make you bring any special documents. This will make the process go a lot more smoothly. If it turns out that your business credit score is not good enough or there is some other insurmountable obstacle preventing you from buying the car, you can always lease it.
Step 5: Complete the required paperwork. There are a few important items to keep in mind both before and after the purchase in terms of paperwork.
First, make sure you have insurance on the vehicle. You don’t want to leave the dealership without it. Secondly, have the car registered and be aware of any and all DMV regulations for company owned vehicles in your state. This will keep you within the confines of the law and it will protect you financially.
Buying a car under a business name does not differ substantially from an individual car purchase. By maintaining good credit and following the rules in your state, you’ll be on the road in no time and on your way to growing your business and meeting its needs.