Businesses have a wide range of loans, purchase and leasing options when it comes to cars. Whether you're acquiring a single company car or an entire fleet, we’re here to explore the different financing options, requirements, and processes so you can make the right choice to get you on the road.
0
min read
For many businesses, a vehicle is a must have, whether you’re delivering products or travelling to meet clients. Even if you’re not on the road for work, a business car loan or purchasing a vehicle through your company can be an efficient way to buy or lease your means of transport.
In the UK, businesses have several options when it comes to financing vehicles. The most common types include:
Depending on your plans for the vehicle and how, as well as how long, you intend to use it, different finance options might suit you.
The process of obtaining a business car loan typically involves the following steps:
While business car loans are tailored for vehicle financing, small business loans like those offered by iwoca can be a flexible alternative.
An iwoca flexi-Loans is designed to help small businesses access funds quickly, with fast application, transparent terms and full control for borrowers.
{{calculator-cta="/components"}}
Interest rates for business car loans vary based on factors such as the type of financing, the lender’s terms, and your business’s credit history.
Secured loans generally offer lower rates compared to unsecured loans. For example, secured business car loans may start at around 3%.
Yes, financing a car through your business is a common practice. Businesses can choose from several financing options, including hire purchase agreements, finance leases, and contract hire, depending on whether they prefer to own the vehicle at the end of the term or simply lease it.
Leasing a car through a business is often cheaper upfront compared to buying, as it requires lower monthly payments. Leasing also provides flexibility, as you can upgrade vehicles more frequently and avoid concerns about depreciation.
Yes, businesses with bad credit can still obtain car finance, although they may face higher interest rates or need to provide additional security, such as a personal guarantee or a larger deposit.
The required business credit score to lease a car varies by lender, but generally, a higher credit score increases your chances of approval and securing better terms. Businesses with lower credit scores may still qualify but might face higher interest rates or require additional guarantees.
Yes, a business car lease can impact your business credit score, as it is a form of borrowing. Regular, on-time payments can help improve your credit rating, while missed payments can have a negative effect.
Business car finance can be more cost-effective than personal finance, especially when considering tax benefits and the ability to reclaim VAT. Additionally, businesses often receive better rates and terms due to bulk purchases or fleet agreements.
Yes, businesses can typically claim VAT on car finance payments, especially when the vehicle is used solely for business purposes. However, this depends on the type of vehicle and financing agreement. For instance, VAT can often be reclaimed on lease payments but not on purchase payments.
Whether to finance or pay cash for a business vehicle depends on your company’s cash flow and financial strategy. Financing allows you to preserve cash flow for other business needs, while paying cash avoids interest costs but ties up capital that could be used elsewhere.
To apply for a business car loan, you’ll need to provide several key documents, including your business’s financial statements, credit history, and details about the vehicle. Additionally, some lenders may require a business plan or proof of trading history.
