Buying a Vehicle for Your Business

Buying a vehicle for business use, whether you're buying just one, or a full fleet, is a process that is just a little bit different than buying a vehicle for your own personal use. With that in mind, we wanted to share a few tips for making a business purchase:

1. Do Your Homework

You'll want to make sure that the vehicle you purchase suits the needs of your business. While online research can serve as a great starting point and gathering information to narrow your search, the best way to determine whether a vehicle is right for you is to come to the dealership in person and see, touch, and test drive. In some cases larger companies that buy vehicles in great volume will deal with our Fleet manager, but most small business buyers can deal directly with one of our knowledgeable retail sales representatives.

2. Understand the requirements

When purchasing a vehicle for a business, there are a few key pieces of information that will be required. Small businesses are normally required to provide proper business information, including:

  • Articles of Incorporation
  • HST (or relevant tax) information
  • Financial records
  • Banking and credit history

If your company has previously financed or leased a vehicle, then you will have automotive-related credit history and that information can be used to secure a loan. It's important to recognize that in many cases, the interest rates offered to a Commercial/Business buyer will not be as competitive as they may be for a personal buyer as there are often special offers available to personal buyers from Banks and Automotive lending institutions. If you intend to buy a vehicle in your business/company/commercial name, the incentives and interest rates might be different that if you are buying a vehicle as a private individual.

3. Establishing Credit: Chicken or Egg?

Many new businesses run into the issue of  what comes first ... the chicken or the egg? By this we mean, how does a small business establish automotive credit history in order to qualify for competitive finance rates if nobody will give them credit to start off? In many cases, the owner of the business co-signs along with the company on the application and on the contract. This allows the finance contract to be registered in the company name and also in the owner's name producing two advantages -- vehicle registration can be under the company name for insurance and tax purposes, while having the owner's name on the loan may qualify for better interest rates or other incentives. This is a great option for many small businesses, especially if you are just establishing your credit for the first time.

Buying a vehicle in a Business name is not always an easy task. The process and requirements are all a little bit different depending on the size of your business and the credit history. It can take more time to secure than a regular loan application and you will be required to provide additional information and documentation to support the credit-worthiness of your business. Sometimes there is value in going through the exercise and sometimes there is not.

If you would like more information or just to talk about the available options please feel free to contact me at peterp@metrochrysler.com