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How to buy a car under your business’s name

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carcar

 

How to buy a car under your business’s name

Having a company car can be highly beneficial for your business. You can use it for transporting products, going to client meetings, and for your staff to get to and from work if their own transportation is not available. But you might not know exactly how to buy a car under your business’s name.

When buying a car for your business, business vehicle finance requirements include payslips and three of your most recent monthly statements, a business plan outlining how you will use the vehicle and why it is necessary to help grow your business. If you are interested in getting a company car, you can read on below for some top tips on how to buy a car under your business’s name.

 

Look at both your personal and business credit

One of the first steps you will need to take when applying for business vehicle finance is to check both your personal and business credit rating. This is because lenders will look at both in order to ascertain your risk profile and your ability to repay the loan.

One of the business car finance requirements is to allow the bank to check your credit history, and it is better to be prepared ahead of time. This will allow you to clear up any discrepancies and explain any missed payments. You will also be able to contact the credit bureau and ask them to rectify any issues or mistakes that you might find. Be sure to do the same for both your personal and business accounts.

 

Get the right documents together

You will need to gather the right documents together as part of the finance requirements of your lender. Some of these documents include the following:

  • A copy of your identity document as well as any partners’ or shareholders’
  • The company registration and VAT number (if applicable)
  • The company’s banking details and balance sheet information
  • All contact information including company address
  • The details of the director, members and trustees (if applicable)
  • The details of the vehicle you want to finance

You will need to fill in the relevant forms if applying online and scan and attach all of these documents when sending you application to your lender.

 

Look for the right insurance

As with buying a personal car, lenders require you to look for insurance before they allow you to purchase a car. This means that you will need to look for the right insurance to meet your needs, which is usually commercial finance if you will be putting the vehicle in your business’s name.

If you are not sure what insurance is right for you, you can speak to a broker and explain your situation to them. They will be able to provide you with some quotes for you to compare in order to make the right decision. Your lender might have some insurance companies that they prefer working with, so you should also ask for their advice. Business car insurance will cover different aspects than personal car insurance so be sure that you understand the difference.

 

Stick to your budget

One of the most important aspects of buying a car for your business is to create and stick to a budget. You will need to look at your business finances and see what your financial health is like. Your profits will have a significant impact on how much you can afford to spend on monthly car repayments.

As a small business owner, you likely have a small budget for a vehicle. For example, if you own and run a small boutique coffee shop, you should not be looking for a company car that costs R500 000, you should be looking for an affordable van to move your stock from the warehouse to your store. You will also need to factor in whether or not you are paying staff or if you are the sole worker in your company. Speak to a financial adviser about how you can budget for a company car.

 

Structure your contract

It is possible to speak to your lender about structuring your loan contract in a way that is affordable for you. You will be able to choose the contract term, the type of interest rate that you want as well as whether or not you want to pay a deposit or a balloon payment.

You will need to consider the different types of interest rates that you can look into for your car loan, either  a fixed interest rate or a linked interest rate. A fixed interest rate is higher than a linked interest rate but it will not fluctuate during the period of the loan. A linked interest rate will change according to the reserve bank interest rates.

 

Final words

Business car finance requirements might sound tricky to navigate but they are easy once you understand what is needed. You will have to provide all the necessary documents to the lender after you have done a personal and business credit history check. Business vehicle finance also requires that you have insurance before you purchase a car so be sure to find the best one to suit your needs.

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