Businessman Driving Car


When running a successful business operation, the time will come to transition from using your personal vehicle for work, into using a business vehicle. We worked with our dedicated Business Solutions team to come up with a handy guide on what you should know before financing a commercial auto.


Details of a Commercial Auto Loan

Financing for business vehicles is not only for large businesses. Small businesses, consultants, and salespeople need to finance personal-type vehicles and small delivery vehicles for work-related use. Before getting a business car loan, consider what could affect your rate, who will finance the vehicle, and what documents you need.

What factors could affect your finance rate?

There are a few factors to consider before comparing pricing.

  • Are you buying new or used? Planning on buying or leasing? Remember that the benefits between buying or leasing your commercial vehicle may vary.
  • If used, how many miles are on the vehicle?
  • What is the age of the vehicle? Depending on the make and model, some financial institutions will not offer a commercial auto loan if the vehicle is five years or older. These factors will affect the rate you will be charged and the number of years you can finance the vehicle.

Who will Finance my Business Vehicle?

Some dealers simply do not have the systems and financing sources in place to finance commercial loans. This is because business vehicles are depreciating assets and can be risky purchases for a business. Commercial vehicles are known to drop approximately 20% in value within the first 12 months of ownership. Before deciding on a new or used vehicle, take advantage of Edmund's Cost to Own calculator to discover the expected depreciation of your auto.

Purchasing can pay off in the long term compared to leasing, and the depreciation can be written off during tax season. The global shortage of new and used vehicles could turn your used business vehicle into an asset in the future.

First Commonwealth Business Services when you know what type of vehicle you are purchasing. We can discuss rates and terms with you to help you get the best deal.

Documents Needed to get a Commercial Auto Loan

Financing a business vehicle is more involved than getting a loan for personal auto. Make sure to have the following documents accessible when you contact your lender.

  • Business licenses
  • Driver’s license
  • Partnership agreements
  • Profit-loss statements
  • LLC documents
  • Federal employer identification number (EIN)
  • Tax returns
  • Bank statements
  • Cash flow statements
  • Driver’s license

If you are missing the required documentation, contact Business Solutions to connect with your officer.

Credit Requirements for a Business Vehicle

Low-rate auto loans are subject to a credit evaluation, with lenders having the ability to turn down financing applicants. Credit Unions are known for their ability to offer lending options to individuals and businesses with suboptimal credit, and First Commonwealth is no exception.

Financing Terms and Tools to Know before buying

As an owner of your business, you will likely be required to personally guarantee the vehicle loan. It is important to understand the difference between a co-borrower and a guarantor.

  • Co-borrower: If you are a co-borrower the loan will most likely report to your personal credit report. This will affect things like your debt to income ratio and other items if you attempt to attain credit personally.  

  • Guarantor: As a guarantor, you are pledging that if the business does not repay the loan you personally will make sure the loan is paid. This would be considered a contingent liability to you personally but not report to your credit report.

  • Preapproval: Financing your business vehicle can occur before you reach the dealership. Preapproval from a lender, such as First Commonweatlh will help you budget your business expenses by understanding your future financial obligations.

  • Prepayment Penalty:  Some loans have a prepayment penalty and charge you for paying ahead. If you plan on paying off the loan early, you may want to either choose a different lender or negotiate to remove the penalty.

First Commonwealth does not impose prepayment penalties. First Commonwealth offers commercial vehicle financing for all types of vehicles with competitive rates and terms. If you are in the market for a new business vehicle, please contact our Business Services department today at 610.997.6381 to discuss financing for your commercial vehicle loan.