Credit Profile Requirements

Hello, and welcome to this particular module credit profile requirements as it relates to purchasing a vehicle in your company’s name. So I’m super excited to be sharing this with you, because at this point, if you’re watching this, this means that you have at least seven tiers of credit built up on your corporate credit profile. So what I’m gonna do is, is get into the requirements, so that way you can leave the dealership with a vehicle in your company’s name, but before we get to the dealership, we need to make sure that we meet these requirements. So the first thing is, what I’m going to do is cover what a business loan is, what a business auto loan is, I’m also going to break down some of the credit profile requirements, and then we’re going to get into business auto loans with bad credit, which I really wouldn’t recommend, but you can look at that.

Also business auto loans without a personal guarantee, which is possible, the best on business auto loans, and then how to apply for a business auto loan. Now I’m going to be covering loans, but again, the same taxes that we’re going to cover could very well apply if you’re looking to get a lease as well, meaning you don’t want to purchase or finance a vehicle with an installment loan per se, you want to do a lease. All right, so let’s go ahead and hop in, and then I’m going to break down with the best business auto loans. So what does a business auto loan? So this is fairly simple, but just want to go and define it. So a business auto loan sometimes called a commercial auto loan is a specific form of equipment financing that allows you to access low-cost capital to purchase cars or trucks with the function as collateral for the loan itself, very similar to a personal loan.

So this self-collateralizing setup makes it much easier to find a business auto loan without a personal guarantee requirements. And as we already understand, personal guarantee means essentially you’re personal guaranteeing the loan with your personal credit. Now, when you do this, coupled with the tiers that you’ve already built up in your corporate credit profile with your Dun and Bradstreet, and also your Experian Intelliscore, you should be at a good place, but even if you need to personal guarantee not a big deal. Now, overall business loans are very similar to consumer loans like I was saying. And although the rates and terms are going to vary based off the lender, these business loans are generally very affordable and accessible for any business of all shapes, sizes. So again, it makes no sense in my professional opinion, if you have a business to go purchase your next car in your business’s name for a number of reasons, the big one is DTI.

You don’t want this showing up on your personal credit. So I recently closed on my second investment property. And before I purchase that investment property, I bought the 2021 Tahoe in 2020 in an effort to number one, build business credit, but then number two, lower my taxable income, all that, to say that they did not show that Tahoe on my personal credit at all, because it was only on my business’ credit file. And that’s essentially what you want to do and how you want to set this up. Now, when we look at some of the credit profile requirements, so before we even head to the dealership, I’ve already said this before, you know, you want to make sure you pull your business credit report and your personal credit report from all three credit bureaus. You also want to look at your Dun and Bradstreet, your Equifax and your Experian, and you want your score to be at least an 80.

So you can go over to Nav.com and although NAv is only going to show your personal credit with TransUnion and Experian as a vantage score, you want to have a hand on all three reports specifically, you’re going to NAV to be able to view your business’ credit report, i.e Dun and Bradstreet and Experian. In some scenarios, you should be able to view your Equifax business report and then potentially depend upon the membership that you have with NAV, you should be able to also look at your small business FICO score. That being said, we want to have that 80 credit score on the business side. And if your business credit is weak, you don’t want to finance it. You want to potentially consider leasing the car in the company’s name. You’ll still be able to get the same exact benefits of as a tax perspective, which is the number one reason why you want to do this and this start, so showing some credibility.

But also you want to make sure, and you understand that even though you’re doing this in the business’ name, typically, unless you have, I would say, and again, this is like, you know, I’m not the bank, but typically, unless you have about 20, I would say 15 to 22 tradelines reporting on the businesses report. And you’ve been in business for at least three years, three to four years, and you’re showing a specific revenue number, the businesses they’re going to want to pull your personal credit report. So we’ll want that personal credit report to be, I put down here 600 plus, but in my opinion, we want that personal credit report to be at least a 700, so if you’re in this program, watching this, then you, nine times out of 10 have access to the 700 credit score academy, go through the steps, get your personal credit where it needs to be, and then get your stuff up there.

And then also you want to make sure your business is making at least a hundred thousand dollars in revenue. Now these are the very bare minimum. Okay? So also a couple of things extended here. So your business loans, auto loans requirements are going to vary based off the lenders. So banks typically are going to have the strictest requirements whereas alternative lenders will be a little bit more lenient. And then you’re going to also notice that the banks that have dealer financing, so for instance, Chevy or GM financial, they’re going to be a little bit more ready to get the deal done because they’re selling a Chevy and they want to finance and sell it Chevy and want to sell the Chevy, so you want to kind of consider that. There are going to be other banks that we’ll include. So like I know for a fact Chevy which is GM financial, you’re going to have your Ford, which is going to be Ford, Lincoln-mercury, but typically Ford and Lincoln are going to really fall into the same umbrella.

Lincoln recently created their own financial services division, but it still falls under Ford credit. Okay, you’re going to have your Nissan, which is going to cover not only Nissan, but also Infiniti. You’re going to have your BMW and Mercedes, which typically going to be BMW and Mercedes, that you’ll be able to go get financing for obviously Nissan because it’s associated with Infinity. And generally speaking from my experience, those companies are going to have those commercial leases. Now, in other scenarios, if you’re looking for a company like a Volvo, like this was when I was really wanting to get in my experience, Volvo doesn’t really do business leases. So you want to go to a business lease or commercial lease. You want to go to one of those companies that have been proven to do this. Also, although I didn’t look into it, I know they have it Chrysler, Dodge, Jeep.

And when we’re going down this road, we really want to be looking at those SUV’s as at least 6,000 pounds. All of those companies have specific finance departments and commercial departments to be able to finance this in the business’ name. Also, Ally, A L L Y is another bank that will create and do financing for loans as well on the business side. Now, when we look at business loans with bad credit, again, in my opinion, I don’t suggest you do this because you’re going to end up having to pay more. So, you know, you can secure a loan despite having bad credit, and you’ll often end up paying a higher interest rate. So lenders are going to require a personal guarantee, almost always. And then that provision is going to hold you personally liable for repaying your loan. So they do this because when people typically have bad credit, it’s signifies that you have a history of not paying the loans on time or multiple unsuccessful inquiries.

And they don’t really want to lose the money. So generally speaking, I’m not going to recommend that you do this and you go, and you get your personal credit right now. You could have, you could, if you follow the system. Be at a place where your business credit report can stand on its own. You have the revenue ,you have the lines you’re not going to necessarily need to personally guarantee, then that’s fine. But again, how you treat one area of your life is how you treat all the other areas of your life. So let’s just get your personal credit, right, right? In my opinion. So that way you don’t have to worry about, you know, them pulling it. And if they do pull it, you still can look good and then not report in your personal credit file.

Now, when we look at auto loans without a personal guarantee and this is possible, it just really depends on the amount of vehicle you’re looking to get financed in the company’s name. So, you know, many business owners do try to avoid having to use a personal guarantee on a small business loan. And that’s because the business is unable to make payments, the lender will go after the owner’s money and assets, but still there’s a good chance that you can’t qualify for commercial auto loan, without a personal guarantee and be able to have that 100% of the business name based off your business credit report. So if you’re following the system, you did that you could be at that place case in point again, you want that business to be at least three to four years old, have its own tax returns.

It doesn’t matter if it’s an LLC or an Inc. It’s more so about the content of the credit report. Give you an example, so I went and purchased the 2021 Tahoe and I had never purchased a vehicle than my company’s name ever. Okay. And then I never, even on the personal side, got a vehicle that was worth, I mean that I finance a vehicle that was more than like 30,000, 35,000 personally. So I went out and was able to get a loan in my company’s name, but because that company had never had that much credit, I had to personally guarantee, and it was like 60k, 59,000, something like that for the Tahoe. Versus on the other hand I went to the same exact dealership, me and a buddy. He has an LLC and this business has been around for about four years.

And he leased another vehicle was a Chevy Traverse. Now the Chevy Traverse was only 30,000 and he didn’t have to personally guarantee that at all because his business had already demonstrated prior that he had already paid back loans. And, it wasn’t that big of a loan. I’m led to believe had he gone for the $60,000 loan like I did, or the $60,000 vehicle he probably would have had to personally guarantee. So it just really depends on the amount of loan your vehicle is looking to get and how long the business has been established. And then what lines is actually reporting on that particular credit file. Right? So when we look at the requirements of how to apply for business loan, it’s pretty simple. So first thing you want to do is find the car or truck or any vehicle that you want to purchase in for your business.

Now I’ve already outlined a couple of dealerships that you want to look for. Now, when you’re comparing different options, you want to consider whether the vehicle is new or used. Generally speaking, you cannot finance or you can’t lease, generally speaking, you can’t re-lease a used vehicle unless you’re going to like swap a lease. Okay. Swap a lease is something totally different, but swap a lease typically is only for personal leases. I haven’t done the research to identify if there are commercial leases on there, but you could go to swap a lease and just pick up the lease. However, in general terms speaking, you’re going to be financing or leasing a new vehicle. You also want to look at what condition is in, what the maintenance will look like and then also how much this is going to cost you to finance it. Now, most lenders don’t want to see a quote as a part of the financing application.

So once you found that vehicle that you want, you want to also make sure you request that information from the dealer. Now, again, when you’re calling these dealerships, you want to speak directly to their commercial lending department. 99% of the people who sell cars don’t even do commercial financing. They’re going to try to sell you on personal credit, or you could do it in person name. You just have to co-sign, you’re not co-signing for this. Okay. Co-sign and personally guarantee two different things. Co-Signing means you’re going to have this on your personal credit. You want to avoid co-sign absolutely. Personal guarantee, on other hand is perfectly fine because it’s just saying you’re going to personally guarantee based on the credit, but it’s not going to report to your credit file. Now, once we’ve identified that you want to basically determine what type of business loan you’re going to be able to qualify for.

Overall business auto loans are a form of secured financing and then more manageable requirements than unsecured alternatives. So you want to look at options that you have with that specific dealership. Again, I’m going to suggest again, Chevy, Ford Dodge, those lenders. I mean, those vehicles that are American vehicles, because they’ve been doing this for years, okay. Then you want to choose a lender, submit the application. So again, if you know that you want to get the Chevy Tahoe, I know the range Rover does this as well, but they’re going to want you to personal guarantee, nine times out of 10. But once you’ve identified the particular vehicle, then you want to go and move forward with the application process. So once you’ve qualified and gone through that process, you want to go with move forward and get them to do it.

Now, I don’t recommend you do this with multiple situations. So you want to look at again, in my opinion, if you’re going to do an SUV, look at the Tahoe compared to the Durango, compared to the Ford Explorer, compared to the expedition, compared to the, all the GM products that are offered, and then just make a decision, okay. And say, Hey, look, I like this one because it checks off all the boxes. When I looked at and I did my due diligence Ford and again, I’m not telling you to Tahoe. When I looked at all the value that the Tahoe gave me, if I were to go to Mercedes or BMW, or even to have gotten it as a Lincoln, it just had way more bells and whistles being a Tahoe than those other vehicles did. Like, for example, I like V8.

Okay. I like heated seats. You know, my Tahoe has heated seats in the back and the front. You know, if I want to heated seats in the back and the front and I went over to BMW or Mercedes I’d been paying almost a hundred grand for that car versus 60K, you know, or if I wanted heated seats or souped up version of a Range Rover, the Range Rover with the benefits and the bells and whistles that I have in the Tahoe would have been like 80, 90 grand. Okay. So what I’m saying to you is look at the vehicle that you think is going to be best for you. Compare all the options, then go to that dealer specifically to the commercial lending department. Okay. Now, once you’ve done all that stuff, you want to start that specific application process with that lender. And again, banks are going to have more intensive processes and be slower to fund, whereas online lenders or that specific lender with that specific company is going to be able to get the deal done a lot more efficiently.

So you may want to have your financial statements, bank statements, and tax returns, and any other documentation. I didn’t have to provide any of this stuff because my business’ report and my personal credit report was already good. Okay. So when we start going, looking at these options, you want to, you know, review your offer and get your funding. So after you submitted your application, you receive an offer. You’ll want to review it thoroughly and perhaps consult with like an accountant or an attorney to ensure that you understand all the terms and the conditions in the fine print. You don’t have to sign it right then. But if you understand everything and you feel like you’re getting a good deal when you’ve gone through, I highly recommend going through the auto financing system, although it’s for personal loans, it’s still the same exact thing on the commercial side.

The only difference is you’re just getting them on the business side. Now, once you receive that, you want to go move forward to loan agreement. Okay. And that’s pretty much it. So this kind of gives you the high level overview of what to expect throughout this process. Take action on these action steps on this content, and I’ll see you in the next module.