Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Apr 14, 2021

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  • Commercial vehicle loans help businesses who are short on cash get the vehicles they need to operate their business
  • Commercial auto loans can be offered by banks, lending institutions, credit unions, and more
  • The IRS could flag you if you try to buy a personal vehicle using a commercial vehicle loan

Commercial vehicle loans are essential for everyday business. This type of auto loan can be used to buy trucks and other large vehicles that are quite a bit more expensive than the average consumer vehicle. However, many commercial auto loans are used to buy consumer vehicles too.

The important thing to remember is that the vehicle must be primarily used for business purposes. Buying a personal vehicle with a business auto loan could get you flagged by the IRS.

If you are a business owner in need of a vehicle or even a fleet of vehicles, we will take you through all of the details of commercial auto loans that you need to know about.

If you’re ready to get a commercial vehicle loan, enter your ZIP code above to compare rates on commercial vehicle loans.

What is a commercial vehicle loan?

Commercial vehicle loans are used by businesses to buy vehicles that will be used for business purposes. These vehicles could include vans, trucks, and consumer cars, but their main purpose needs to be for the business.

Business tasks typically considered as work-use are picking up clients, hauling materials, delivering products to consumers, transporting people, and any other type of auto-related task that contributes to the completion of a job.

Many commercial vehicle lenders will cover the costs 100 percent with no down payment, but this will exclude used models.

In fact, some lenders won’t even finance used vehicles because they depreciate too much, so check with your lender before you decide on what vehicle you are going to purchase.

How do I get a commercial auto loan?

You must decide on a lender. Many businesses will use their banking or lending institutions to secure this loan because they likely have other loans already associated with the business.

If you don’t already have a banking institution that you are comfortable working with, you can shop around with different lenders until you find the best interest rates.

You will need a fair amount of documentation to start the loan application process and get a commercial vehicle loan.

You will need to show the lender how much money you have as a down payment, how much the vehicle costs, how this vehicle will help the business, your business license, tax returns, cash flow statements, and EIN.

Many lenders will probably also request that you submit personal information as well including your personal credit history. You may need to put up collateral as well, depending on your credit history, cash flow, and other factors.

Can I finance big trucks with a commercial vehicle loan?

You can get commercial truck financing to help you pay for your big-rig or other large truck. Truck financing can be done for individual long-haul truckers looking to buy their own rig, or it can be done for businesses who may be looking to buy their own big trucks.

As long as you are using your vehicle for business purposes, there are not too many exclusions that apply to the type of vehicle you can finance.

Typically, lenders will write loans for as high as 250,000 dollars for commercial vehicle purchases. However, the amount of money you will qualify for will depend on your credit score and other factors.

Can I get a commercial auto loan with bad credit?

Yes, you can get a commercial auto loan with a bad credit score, but you will pay a much higher interest rate as a result. Lenders are wary of lending too much money to people with bad credit. If you get a loan, you will have to pay more interest to make it worth the lender’s risk.

There are companies like Advantage Auto that cater to people with bad credit. However, Advantage Auto loans will also have interest rates too.

If you have bad credit, there is no escaping increased interest rate payments. You could end up paying as much as 18 percent interest with your bad credit score.

Do I have to give a lender a personal guarantee to get a commercial vehicle loan?

No, you don’t necessarily have to offer up a personal guarantee when trying to secure a commercial vehicle loan.

Many business owners want to keep their business and personal finances separate, so if the business fails, creditors cannot come after their personal assets.

If you’re thinking about co-signing a loan agreement with a business partner, here’s what to know before co-signing an auto loan.

You might not have a choice when it comes to putting up a personal guarantee if your business is new, you have poor cash flow, you have poor credit, or the loan amount you want is too much risk for the lender.

If a personal guarantee is something you want to avoid giving, you should try and get a smaller loan if you are denied a larger loan without a personal guarantee.

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Should I lease commercial vehicles instead of buying?

Many businesses choose to lease their commercial vehicles. Why? Vehicles depreciate quickly in value, and it is far cheaper for businesses to lease vehicles than it is to buy them.

Some businesses decide that buying commercial vehicles is still in their interests if they are going to keep the vehicle for a long time, they intend to write the depreciation off on their taxes, or they don’t want to be constricted by the mileage limits of a lease.

Commercial Vehicle Loans: The Bottom Line

If you are operating a business and you need to buy a vehicle, a commercial auto loan is a great option for you. These loans can be used to buy any type of vehicle as long as it is used for business purposes.

If you’re interested in reading more information about commercial auto loans, Experian has a helpful resource for you to peruse.

If you’re ready to apply for a commercial vehicle loan, enter your ZIP code below to compare quotes for commercial vehicle loans in your area.