Buy a Car Under a Business Name
In the world of business, people and companies are two separate entities that don't necessarily need to be connected. In the United States, it is possible to get a car loan under a business name without ever giving out your social security number. Commercial vehicle loans are given based on the credibility of a business entity, not the creditworthiness of a person. The process of how to buy a car under a business name can be accomplished after a company becomes established, which can take approximately 2 years.
Contents
Steps
- Establish business credit that is tied to an employer ID number (EIN). EINs can be obtained by filling out IRS form SS-4, which is available on the IRS website. Contact business credit bureaus such as Experian and Dun & Bradstreet (D&B) to inform them of your company's existence so that a business file will be opened on behalf of your company. Business lenders will be checking your business credit file before they extend credit to your company.
- If your company is not new, you have probably already established some sort of business credit. If this is the case, pull your own business credit reports from Experian and D&B to find out.
- Find a dealership that specializes in helping businesses buy a car under a business name. Not all dealerships will help finance or sell cars that are intended for business use. Research local and online dealerships to find one that will accommodate your business' needs.
- Finance your business vehicle. If your company is well-established and has a good business credit profile, you should find plenty of lenders who will extend a commercial vehicle loan to you. If your company has little, bad, or no credit, you will have to be much more creative during the loan-hunting process.
- Your local bank, major car manufacturers, and business banks are excellent starting points when shopping for a business vehicle loan. Compare the interest rates from all the lenders, and choose the loan with the best interest rate and terms.
Tips
- You can obtain additional benefits once you Register and title a vehicle under a business name. Vehicles that are used for business purposes receive tax credits that personal use vehicles do not qualify for. Also, if your business vehicle is titled under a business name, it can help to shield you from liability if that car is involved in an accident.
Warnings
- Contact your business accountant and attorney for guidance and advice before purchasing a vehicle.
- Do not purchase a sports car or luxury car under a business name unless these types of vehicles directly relate to your business' purpose. Purchasing flashy vehicles can be a red flag for the IRS and may cause an audit. If you cannot prove that your vehicle is used for business purposes or is appropriate for your line of work, you may be in trouble with the IRS. Economy cars, trucks, vans, and other utility vehicles are the best choices when you are purchasing a corporate vehicle.
