What kind of vehicle can you get a company car loan for?
Financing your own business is possible in many ways. Among the most popular are savings, grants and subsidies, bank loans and funds from shareholders. However, the day-to-day needs of a business are most often financed with classic bank loans, and there are many to choose from. Starting with working capital loans, through investment loans and ending with car loans. The latter will allow you to finance not only cars, but also other vehicles that will enable you to both grow and achieve your goals.
Car loan for a company. What do you need to know?
Before listing the types of vehicles for which you can get a car loan for a company, it is worth describing in a few sentences what a car loan is in general and why it should not be confused with a car loan. This is because many people to this day still equate a typical cash (non-targeted) loan with a car loan, which is the purest form of a targeted loan, meaning one that can only be used for the purpose specified in the contract. It doesn’t matter whether it is for an individual or an entrepreneur.
In addition to the purposive nature of the loan itself, a car loan is usually also associated with the need to establish collateral on the vehicle financed by the bank, which at the same time reduces the cost of the loan. With collateral in place, the bank can lower the interest rate on the loan, as well as significantly lower the loan’s commission and margin. This makes a car loan for a company usually much cheaper than a car loan, i.e. a classic cash loan. The latter, in the case of entrepreneurs, can be difficult to obtain, since banks only have cash loans for individuals in their offers. The only solution would be to take out a working capital loan and use it for a car, but this is not a sensible solution.
Car loans for businesses are a large part of the offerings of various banks throughout the country, and the money received under this financing, can be used for many different vehicles.
What kind of vehicle can you get a business car loan for?
The very name suggests that car loans for companies are addressed exclusively to entrepreneurs seeking financing for the purchase of a car. Nothing could be further from the truth, as most banks offer car loans for a variety of vehicles.
For consumers, a car loan can be obtained for, among other things:
- Passenger vehicles and trucks up to 3.5 t GVW
- Registered motorcycles, scooters, quads
- Registered floating equipment-yachts, motorboats, boats, sailboats
- Caravans, camper-type vehicles
- Cargo trailers up to 3.5t GVW
- Minibuses up to 3.5t GVW
And as far as entrepreneurs are concerned, a car loan can be used for, among other things:
- passenger cars,
- trucks,
- scooters, motorcycles, quads,
- boats, yachts,
- caravans, campers,
- multipurpose trailers,
- buses,
- cargo trailers,
- truck tractors, cargo trailers,
- agricultural tractors,
- excavators, loaders, bulldozers.
As you can see, this is a really large group of vehicles, and whether a bank will be willing to grant a company car loan for a particular vehicle depends entirely on the bank’s lending policy.
Car loan for companies. What kind of collateral?
As we mentioned earlier, a car loan for a company, but also for individuals, will be a cheaper solution than a cash or investment loan. This is primarily due to the collateral that the bank will make when granting the loan. Several forms of these are used in Polish banking, but the most common include transfers of title as collateral and registered pledge. Commercial law companies can also often expect the board of directors to issue a blank promissory note, although this surety is not required.
In addition to one of the above-mentioned forms of collateral used by banks for corporate car loans, financial institutions usually also require the purchase of an additional AC policy, which protects not only their interests, but also the borrower himself. In the event of total loss or theft of the vehicle, it is the insurer that will take the burden of paying the rest of the loan installments.
Car loan for a company. What kind of down payment?
Entrepreneurs considering taking out a car loan must expect that banks will require the submission of appropriate financial documentation, and the company itself must demonstrate a certain creditworthiness. This causes many people to turn to an alternative to credit – leasing for business – to finance the purchase of a vehicle. It is worth noting at this point, however, that both leasing and a car loan for a company usually involve a down payment. This one depends, among other things, on the vehicle itself, with the lowest for new cars and the highest when the financing target is a specialized vehicle, which can be difficult to monetize when the entrepreneur stops making loan/lease payments.
The standard down payment starts at 10 percent of the vehicle’s value, but many banks are willing to lower it based on the company’s financial documents and credit history.
