How to Buy a Car Under a Business Name

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  • Business credit
  • Choosing a vehicle
  • Financing
  • Registering
  • Insuring with Jerry
  • FAQs
Before you can buy a car under a business name, you’ll need to establish your business credit, which can take up to two years.
With just a few simple steps to establish your credit and take out a company loan, you can buy a vehicle under your business name.
Jerry, the car insurance comparison shopping and broker app, has outlined everything you need to know to make buying a car under your business name easy.
Not only that, downloading Jerry could help you save hundreds (if not thousands) of dollars on your car insurance policy. After completing a simple 45-second signup process, you’ll never have to worry about shopping for car insurance again—Jerry always makes sure you’re paying the most affordable price for the best coverage.
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Establish your business credit

Before you start looking for a company car, you’ll need to build and maintain enough business credit to take out a loan.
1. Get a tax ID number. You’ll need an Employer Identification Number (EIN) from the IRS to start establishing your business credit. Another way is to fill out an SS-4 form on the IRS website.
2. Create a credit profile. Create an account with a top-tier credit bureau. Once your profile is made, you can upload financial statements and other company information.
To get a credit score with a credit bureau, you’ll need at least three trade lines with large corporations, such as FedEx or Staples. Make sure to have your supplier send your company’s payment information to the credit bureau.
3. Build and maintain your business credit. Building enough credit for your business can take up to two years, which is why you should get started as early as possible. To obtain a high credit score, you’ll need to do the following:
  • Pay your bills early. While paying your bills on time is always a good idea, submitting your payments early will improve your credit score.
  • Don’t use too much credit. Limit your company to 20-30% of accessible credit.
  • Review your public records. You’ll want a spotless record to establish good credit. Things like going bankrupt or court penalties will all lower your score.
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Buy your car

Now it’s time to pick your vehicle but there are a few things you need to do before heading to the dealership.
1. Check your business credit score. Check up on your business credit score with several credit bureaus. You’ll have to pay to check your credit score, but it’s worth it to know where you stand. It typically costs between $37-$100 to see your score.
Your credit score will range from 0-100. If your score is over 80, you should qualify for loans. If it’s below 80, getting a car loan in your company name is a better option than buying for now.
2. Find car dealerships that specialize in commercial sales. These divisions specialize in helping businesses buy vehicles and will make purchasing your vehicle easier.
3. Pick out your car. Make sure the vehicle meets your business’s needs. For example, if you own a delivery company, a mini-van or truck would be an ideal fit. If your vehicle is being used for transportation, pick a car with great gas mileage.
4. Provide your financial paperwork. Before offering a loan, banks will want to see a variety of financial documents, such as financial records.
Lenders will likely pull your personal credit score as well, which is why you should check your credit report first.
Tip Purchasing a company car for your personal use is never a good idea and could draw unwanted attention from the IRS.

Get a car loan under your business name

Now that you’re ready to purchase your vehicle, you have two options. You can either accept a loan from the dealership or you can check out car loans from banks and credit unions in your area.
1. Provide a guaranty for the loan. If your business credit score isn’t high enough for a loan, you can always sign a guarantee. This means that if your business isn’t able to make the payments, you’ll be personally responsible for the amount.
2. Make regular payments on your loan. Don’t forget to use your company bank accounts when making payments on your loan. If payments are made with a personal account, the IRS might launch an investigation into your business.
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Register your vehicle

1. Get car insurance. If you’ll be using the car primarily for business, commercial auto insurance is the best route to take. If you plan on using the car for business only part-time, it might be better to get personal auto insurance.
If you want to save money on car insurance, the Jerry app is a good place to start. A licensed broker, Jerry does all the hard work of finding the cheapest quotes from the top name-brand insurance companies and buying new car insurance.
2. Register the car in your company name. Each state has different regulations for registering your car. You might have to provide copies of your Articles of Organization to prove that your business is being run properly.
Tip An employee can’t register the car for you. Only a business manager or owner can register a company vehicle.
3. Claim a tax deduction. As you know, the rules for tax deductions are complicated. You might be able to claim a higher deduction depending on your business status—an LLC, corporation, or partnership.

Insure your vehicle with Jerry

You want to make sure you’re not overpaying on insurance for your new business vehicle.
An intelligent AI-based tool like Jerry is not only the easiest but also the most effective way to find a car insurance policy that is customized for you.
After providing you with a comprehensive cross-analysis of the best policies across providers, Jerry will handle the phone calls, paperwork, and renewals for your top pick so that you don’t have to.
So why do all that extra work when Jerry can do it better?

FAQs

Should I buy a car in my business name?

If you’re looking for a company car, and your employer permits it, there are certainly advantages. Buying a car under a company name might make paperwork a little more of a hassle, but as long as you look after your vehicle, there’s no reason not to—as long as you have the go ahead!

Can I get a car loan in my business name?

Yes, as long as you follow standard rules. You’re going to need to provide some sort of guaranty and make regular payments, as you would for any loan. Check in with banks or credit unions first, and then see what kind of offer a dealership can offer you!
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