business plan for car loan

How To Write a Business Plan for Auto Loan in 9 Steps: Checklist

By alex ryzhkov, resources on auto loan.

• Financial Model
• Business Plan
• Value Proposition
• One-Page Business Plan

Are you considering starting a business in the auto loan industry? With the demand for personal vehicles on the rise, it's a smart move. In fact, according to industry statistics, the auto loan market in the US is experiencing significant growth, with a market size of over $800 billion. This presents a great opportunity for entrepreneurs like you to enter the market and establish a thriving auto loan business.

Before you dive in, however, it's important to have a solid business plan in place. This will not only guide you through the process of setting up your business, but also help you secure funding and map out your marketing strategy. To assist you in this endeavor, we've put together a comprehensive checklist of the nine crucial steps to writing a business plan for an auto loan business.

First and foremost, conducting thorough market research is essential. This will provide valuable insights into the current state of the auto loan industry, including market trends, customer preferences, and potential opportunities. By understanding the market, you can tailor your business plan to meet the needs of your target audience.

Speaking of target audience, identifying who you will be serving is the next step. Knowing your target audience's demographics, preferences, and financial capabilities will help you develop loan options and terms that are attractive to them. It's important to analyze the competition as well, to ensure your business stands out from the crowd and offers unique value to customers.

• Determining loan options and terms is crucial in creating a business model that aligns with your target audience's needs and financial capabilities. This will also determine your revenue streams and cash flow projections.
• As you develop your business plan, you'll need to assess your funding requirements. Identifying potential sources of funding, such as investors, loans, or personal savings, will be key in securing the necessary capital to start and grow your business.
• A solid business model is the backbone of your auto loan business. This will outline your operations, revenue streams, and financial projections. It's important to present a clear and detailed plan to attract potential investors or lenders.
• No business can thrive without effective marketing and advertising strategies. By identifying your target audience and understanding their preferences, you can tailor your marketing efforts to reach and attract potential customers. This may include online advertising, partnerships with car dealerships, or referral programs.
• Finally, outlining financial projections is a crucial step in your business plan. This will not only help you track your progress and measure success but also provide potential investors or lenders with a clear picture of your business's potential profitability.

Writing a business plan for an auto loan business may seem like a daunting task, but with our nine-step checklist, you'll be well-equipped to create a comprehensive plan that sets you up for success. So, get ready to enter the thriving auto loan market and make a positive impact on individuals seeking reliable transportation with a manageable payment plan.

Conduct Market Research

When starting a business plan for auto loan, it is crucial to conduct market research to gain valuable insights into the industry and better understand your target audience. Here are the key steps to follow:

• Identify the current demand for auto loans in your target market. Look for statistical data and research reports that can provide you with an overview of the market size and growth rate.
• Study the trends and patterns in the auto lending industry. Identify any changes in consumer behavior, lending practices, and regulations that may impact your business.
• Understand the demographic profile of your target audience. Determine factors such as age, income levels, credit history, and their preferences in terms of vehicle types and loan options.
• Examine the existing competition in the market. Identify the major players, their loan offerings, interest rates, and customer satisfaction levels. This analysis will help you identify gaps or opportunities in the market that you can capitalize on.

Tips for Effective Market Research:

• Utilize online resources, such as industry publications, forums, and social media groups to gather insights and opinions from industry experts and potential customers.
• Consider conducting surveys or focus groups to gather direct feedback from your target audience. This will provide you with valuable insights into their needs, preferences, and pain points.
• Stay updated with industry news and developments through trade publications, industry conferences, and networking events. This will help you stay ahead of the curve and adapt your business plan accordingly.

By conducting thorough market research, you will be equipped with the necessary knowledge and understanding to craft a well-informed business plan for your auto loan venture.

Identify Target Audience

Identifying your target audience is a crucial step in writing a business plan for an auto loan. Understanding who your potential customers are will help you tailor your loan offerings and marketing strategies to meet their specific needs and preferences. Here are some essential considerations to keep in mind:

• Demographics: Begin by defining the demographics of your target audience. Consider factors such as age, income level, occupation, and location. This information will provide valuable insights into the type of individuals who are likely to require auto loans.
• Credit History: Assessing the credit history of your target audience is essential to determine the loan options and terms you can offer. Different groups may have varied credit scores and financial backgrounds, which will impact their eligibility for certain loan products.
• Vehicle Preferences: Identify the types of vehicles your target audience is interested in financing. Whether it's new cars, used cars, or specific makes and models, understanding their preferences will help you tailor loan options to meet their desired criteria.
• Financial Goals: Consider the financial goals of your target audience. Are they seeking lower monthly payments or faster loan repayment? By understanding their objectives, you can develop loan terms and repayment plans that align with their needs.
• Conduct surveys or interviews with potential customers to gather more detailed information about their preferences and needs.
• Stay updated with market trends and consumer behavior within the auto loan industry to ensure you're targeting the right audience.
• Consider partnering with local dealerships or auto sales companies to access a broader customer base.

By identifying your target audience, you can better tailor your loan offerings and marketing strategies to attract and serve the right customers. This understanding will ultimately lead to a more successful and profitable auto loan business.

Analyze Competition

As you plan to enter the auto loan market, it is crucial to thoroughly analyze the competition. Understanding your competitors will provide valuable insights into their strategies, strengths, and weaknesses, allowing you to position your business more effectively. Here are some key steps to consider:

• Research Competitors: Conduct a comprehensive research on the existing auto loan providers in your target market. Identify both local and national competitors to get a clear understanding of the competitive landscape.
• Check Their Offerings: Carefully analyze the loan options, terms, and interest rates offered by your competitors. Evaluate if they cater to a specific audience or provide unique features that differentiate them from others.
• Assess Reputation: Research the reputation of your competitors in the market. Look for customer reviews, ratings, and feedback to understand how they are perceived by borrowers. This can help you identify areas where you can offer a better customer experience.
• Evaluate Marketing Strategies: Examine the marketing and advertising tactics employed by your competitors. This includes their online presence, social media engagement, and any specific campaigns they may be running. Understanding their promotional efforts will enable you to develop a more effective marketing strategy.
• Analyze Pricing: Compare the interest rates, fees, and overall pricing of your competitors' auto loans. This analysis will give you insights into the prevailing market rates and help you determine an appropriate pricing strategy for your own business.

Tips for Analyzing Competition:

• Study the customer reviews and feedback to learn about pain points and areas where competitors may be lacking.
• Identify any gaps or unmet needs in the market that your business can fulfill.
• Consider conducting a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to compare your business to your competitors in a structured manner.
• Keep an eye on industry trends and new entrants that may disrupt the market in the future.

Analyzing the competition will equip you with the necessary information to differentiate your auto loan business and attract potential borrowers. By understanding your competitors' strategies and identifying opportunities for improvement, you can position your business to thrive in the highly competitive auto loan market.

Determine Loan Options and Terms

Once you have conducted market research and identified your target audience, it's time to determine the loan options and terms for your auto loan business. This step is crucial as it will define the parameters within which you will operate and the specific offerings you will provide to your customers.

Here are some important factors to consider when determining loan options and terms:

• Loan Types: Decide on the types of auto loans you will offer, such as new car loans, used car loans, lease buyout loans, or refinancing options. Each type may have different eligibility criteria and interest rates.
• Loan Amounts: Determine the minimum and maximum loan amounts you will provide. Consider the average vehicle prices in your target market and align your loan amounts accordingly.
• Interest Rates: Set competitive interest rates by considering factors such as prevailing market rates, the creditworthiness of your customers, and the risk associated with lending to them.
• Loan Terms: Establish the duration of the loan, typically ranging from two to seven years. Longer terms may result in lower monthly payments, but higher overall interest costs.
• Down Payments: Decide whether you require customers to make a down payment and determine the minimum percentage or amount they need to contribute.
• Collateral Requirements: Define the collateral requirements for your loans, which is often the vehicle itself. Establish how you will assess the value of the collateral and any specific conditions for loan eligibility.
• Additional Fees: Consider any additional fees you may charge, such as origination fees, late payment penalties, or early repayment fees. Ensure these fees are reasonable and in compliance with relevant regulations.

Tips for Determining Loan Options and Terms:

• Research the loan options and terms offered by your competitors to ensure your offerings are competitive and attractive to potential customers.
• Consider flexibility in your loan terms to accommodate different customer preferences and financial situations.
• Consult legal and financial professionals to ensure compliance with regulations and mitigate any potential risks.
• Regularly review and update your loan options and terms to adapt to market changes and better meet the needs of your target audience.

By carefully determining the loan options and terms for your auto loan business, you can provide tailored solutions to your customers while ensuring the profitability and sustainability of your venture.

Assess Funding Requirements

Assessing the funding requirements for your auto loan business is a crucial step in developing a solid business plan. This will help you determine how much capital you'll need to start and operate your business effectively. Here are some important considerations:

• Evaluate start-up costs: Determine the initial expenses you'll need to cover before your auto loan business is up and running. This includes costs such as office space, equipment, legal fees, licenses, and permits.
• Estimate operational expenses: Consider the ongoing costs of running your business, including employee salaries, utilities, marketing, and loan servicing expenses. It's essential to have a realistic understanding of these expenses to ensure you can cover them on an ongoing basis.
• Assess contingency funds: It's wise to set aside some additional funds to handle unexpected expenses or emergencies. This will provide a cushion to keep your business running smoothly even during unforeseen circumstances.
• Consult with industry experts or other business owners in the auto loan industry to gain insights into typical funding requirements for this type of venture.
• Consider seeking professional advice from an accountant or financial advisor to help you accurately assess your funding needs.
• Research potential grants or loan programs that may offer financial support specifically for auto loan businesses.

By conducting a thorough assessment of your funding requirements, you can create a realistic financial plan that aligns with your business goals. This will increase your chances of securing the necessary funds to successfully launch and grow your auto loan business.

Identify Potential Sources Of Funding

When it comes to financing your auto loan business, it is crucial to identify potential sources of funding . This step is essential to ensure that you have the necessary capital to lend to individuals seeking auto loans. Here are some key considerations to keep in mind:

• Traditional Financial Institutions: Banks and credit unions are often the go-to sources for funding auto loan businesses. These institutions typically have established lending programs and can provide the necessary capital to support your business. It is important to research and approach different financial institutions to understand their specific lending requirements and procedures.
• Alternative Lenders: In addition to traditional lenders, there are alternative lenders that specialize in providing funds to businesses in various industries. Research these lenders, such as online lending platforms or private investors, as they may offer different terms and conditions compared to traditional sources.
• Government Programs: Depending on your location and the specifics of your business, there may be government programs available that offer funding or support for auto loan businesses. Research local and national government resources to explore any potential opportunities.
• Private Investors: Another option is to seek funding from private investors who are interested in backing new ventures. These investors can provide capital in exchange for equity or other arrangements, so it is important to prepare a solid business plan and pitch to attract potential investors.
• Research and compare interest rates and terms offered by different funding sources to ensure you choose the most favorable options for your business.
• Consider building relationships with local business organizations or networking groups to connect with potential investors or lenders.
• Prepare a comprehensive and compelling business plan and financial projections to demonstrate the viability and profitability of your auto loan business to potential funding sources.

Identifying potential sources of funding is a critical step in the process of starting an auto loan business. Take the time to thoroughly research various options, weigh the pros and cons, and choose the funding sources that best align with your business goals and financial needs.

Create A Business Model

Creating a business model is a crucial step in developing a successful auto loan business. It involves outlining how your business will operate and generate revenue. A well-defined business model helps identify your target market, understand your customers' needs, and determine the best approach to meet those needs.

To create an effective business model for your auto loan business, consider the following:

• Identify your value proposition: Determine what sets your auto loan business apart from competitors. Clearly define the benefits and advantages you offer to potential customers.
• Establish your revenue streams: Determine how your business will generate income. This may include interest earned from loans, fees for services provided, or other potential sources of revenue.
• Define your customer segments: Identify specific groups of customers who are most likely to benefit from your auto loan services. Understanding your target audience will help tailor your marketing efforts and better serve their needs.
• Outline your key activities: Identify the essential tasks and processes that your auto loan business will undertake to provide a seamless experience for customers. This can include aspects such as loan application processing, credit evaluation, and customer support.
• Consider your customer relationships: Determine how you will build and maintain relationships with your customers. This can involve personalized customer service, efficient communication channels, and regular engagement to ensure customer satisfaction and loyalty.
• Assess your key resources: Identify the necessary resources, both tangible and intangible, that are essential for your business to operate effectively. This can include financial capital, technology systems, human resources, and strategic partnerships.
• Evaluate your distribution channels: Determine the avenues through which you will reach your customers and deliver your services. This can include physical branches, online platforms, partnerships with dealerships, or collaborations with other financial institutions.
• Regularly review and refine your business model to adapt to changing market conditions and customer demands.
• Stay informed about industry trends and regulatory changes that may impact your auto loan business.
• Seek feedback from customers and make necessary adjustments to improve your services and stay competitive.

By creating a solid business model, you establish a strong foundation for your auto loan business. This blueprint will guide your strategic decision-making and help you navigate the complexities of the auto loan industry.

Develop A Marketing And Advertising Strategy

Once you have determined your target audience and thoroughly analyzed your competition, it is crucial to develop an effective marketing and advertising strategy. This strategy will help you reach and attract potential customers, differentiate your auto loan business from competitors, and ultimately drive growth and profitability. Here are some important considerations:

• Identify the most effective marketing channels: Determine the best channels to reach your target audience. This may include online advertising platforms, social media channels, search engine optimization (SEO), traditional print media, radio, or television.
• Create a compelling brand: Develop a strong and consistent brand identity that will resonate with your target audience. This includes your company name, logo, tagline, and overall visual identity. A memorable brand can help establish trust and credibility in the competitive auto loan market.
• Optimize your online presence: In today's digital age, having a strong online presence is essential. Make sure your business website is user-friendly, mobile-responsive, and optimized for search engines. Consider using online marketing tactics such as content marketing, email marketing, and targeted online ads to increase your online visibility and drive traffic to your website.
• Utilize customer testimonials: Positive word-of-mouth is one of the most powerful forms of advertising. Encourage satisfied customers to provide testimonials and reviews that can be featured on your website and social media platforms. This will help build trust and credibility among potential customers.
• Develop strategic partnerships: Collaborate with other local businesses or organizations that may align with your target audience. This could include auto dealerships, car rental companies, or local automotive clubs. By establishing mutually beneficial partnerships, you can tap into their existing customer base and gain more exposure for your auto loan business.
• Regularly monitor and analyze the effectiveness of your marketing and advertising efforts. Adjust your strategy accordingly to optimize results and maximize your return on investment.
• Consider offering incentives or referral programs to encourage customers to refer others to your auto loan business.
• Stay updated on the latest trends and best practices in digital marketing to ensure you are utilizing the most effective strategies.

By developing a comprehensive marketing and advertising strategy, you can effectively promote your auto loan business and attract a steady stream of customers. Remember, consistency and persistence are key in establishing and growing your presence in the competitive auto loan market.

Outline Financial Projections

When creating a business plan for an auto loan, it is crucial to include a section on financial projections. This will provide potential lenders with a clear understanding of your expected financial performance and help you determine the viability of your business idea. Here are some important factors to consider when outlining your financial projections:

• Revenue: Start by estimating your projected revenue, which will primarily come from the interest charged on the auto loans. Consider factors such as the loan interest rate, expected number of loans, and average loan amount. It is important to be realistic and based your projections on industry averages and market research.
• Expenses: Identify all the expenses associated with operating your auto loan business. This may include employee salaries, marketing costs, office rent, loan processing fees, and any other potential overhead expenses. It is essential to be thorough in your analysis to ensure accurate financial projections.
• Profitability: Use the projected revenue and expenses to determine your expected profitability. Calculate your gross profit margin and net profit margin to assess the financial health of your business. Additionally, consider conducting a break-even analysis to understand how many loans you need to issue to cover your expenses.
• Include conservative estimates to account for any unexpected changes in the market or economy.
• Regularly review and update your financial projections as your business progresses.
• Consider seeking the assistance of a financial professional or accountant to ensure the accuracy and reliability of your projections.

By outlining your financial projections, you will demonstrate to potential lenders that you have thoroughly considered the financial aspects of your auto loan business. These projections will also serve as a valuable tool for planning and monitoring the financial performance of your business over time.

In conclusion, writing a business plan for an auto loan requires careful consideration and strategic planning. By conducting market research, analyzing the competition, and identifying your target audience, you can develop a solid foundation for your business. Assessing funding requirements and identifying potential sources of funding will help ensure your financial stability. Creating a comprehensive business model, developing a marketing and advertising strategy, and outlining financial projections are essential steps in the planning process. By following these nine steps, you will be well-equipped to start and grow a successful auto loan business.

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Auto Finance Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business Plans » Financial Services

Do you want to start an auto finance business and need to write a plan? If YES, here is a sample auto finance business plan template & feasibility report.

When looking to start an auto finance business, there is no substitute for a well-researched and quality business plan. All the resource you input in your plan will pay off later in lender responsiveness, investor attention and strategic confidence.

An effective auto finance company business plan is expected to include a comprehensive description of the business and its finances.

Since investors and lenders rely heavily on your business plan’s financial forecasts, fake numbers and vague forecasting are a sure way to sabotage your funding efforts. It is also important to see what the competition looks like. It is important to be aware of what the competition is doing.

Take the time to visit the competition to properly assess their strengths and weaknesses. Top auto manufacturers all over the world have consumer finance subsidiaries that originate loans and manage receivable portfolios valued in billions.

Auto companies generate revenue off the loans and also finance operations by bundling loans as collateral for asset-backed securities that are sold to investors. The performance of your auto finance company will always be dependent on the efficiency and effectiveness of your plans and operations.

A Sample Auto Finance Business Plan Template

1. industry overview.

According to reports, the world automotive finance market size was valued at USD 220.18 billion in 2019 and is projected to show a CAGR of 6.7 percent increase from 2022 to 2026. The incorporation of attractive technology-specific features in the latest automotive parts and the use of good quality materials are leading to a rise in automotive sales, due to the growing customer base.

The steady investment in autonomous vehicles have gingered financing from credit unions, dealers, and banks, which is expected to fuel the market growth. Also, the number of automotive finance customers is growing massively due emerging trend of digitalization, a growing awareness in the use of online services, superior telematics, and advancements in block chain technology.

To quickly and easily obtain financing for new or used vehicles, customers now prefer finance providers who offer data-driven consulting services. These services help determine suitable vehicle as well as a financial scheme that best suits the interests and requirements of the consumers.

Over the decade, there have been significant advancement in the automotive industry owing to the development of highly automated digital vehicles. Innovative technologies are being proficiently deployed by automotive manufacturers and OEMs for increasing their customer base.

The constant use of predictive analytics by financers help customers in better decision-making and securing the best deal available in the market. Also, predictive analytics allows financers to personalize automotive finance packages to meet the needs of consumers.

Growth in the market is further driven by the implementation of new business models and development of inventive strategies by market players. They strive to explore emerging trends, such as electric vehicles and connected vehicle technologies.

Automotive finance provides the platform for middle-class individuals to easily buy or rent a vehicle of their choice, which is otherwise difficult for them due to budget constraints. It also allows customers to cancel their previously finalized deal with no financial penalty, if they find a better deal.

Top businesses in the industry are expected to introduce automotive finance as a smarter debt collection and recovery tactic to reduce default rates. Experts believe this will create new growth opportunities for the automotive finance market.

Meanwhile, due to growing environmental issues (as a result of increased pollution levels), certain automotive eco-monitoring regulations are being enforced by the U.S. government. And stringent regulations concerning credit provision are projected to hinder the market growth to a considerable extent.

Howbeit, automotive financiers are reframing their strategies for products and services and OEMs are modifying their operations for manufacturing eco-friendly vehicles.

2. Executive Summary

Fantastic Auto Loans (FANTOL) is a used car dealership that sells used makes and models. This company was established on January 1 st 2016. At FANTOL, we purchase cars at deep discounts from our local auction house, make the necessary repairs to bring them up to commercial standards, and pass its savings directly to our consumer.

We offer an outstanding shopping experience for customers in Forth Worth, Texas and surrounding areas by incorporating superior customer service and ethical business practices.

FANTOL is conveniently on a busy road located at Sundance Square. There is ample parking and visible signage to easily locate our facility. We also specialize in helping our customers access the best financing possible for the “right car”.

Where most car dealers either reject or manipulate customers with bad credit, we at FANTOL are able to approve nearly 90 percent of loan applicants through the credit company Wellsfargo. We also truce to uphold our strong ethical practices as we do not tolerate exorbitant rates that other dealers will exploit on uninformed clients.

At Fantastic Autos Loans, neither bankruptcy nor bad credit will prevent our customers from purchasing a quality vehicle at a fair price. All that is required is a monthly gross income of $2,100 and a valid driver’s license. In fact, since our inception in 2016, we’ve helped over 90 percent of our applicants secure excellent loans to purchase competitively priced cars.

It is precisely this ethical treatment of an otherwise open market segment in the Fort Worth community that has earned FANTOL an outstanding reputation. We plan to continue using these same tried and tested values to expand in our local market. According to reports, the market conditions in Fort Worth, Texas for used cars are projected to be extremely favourably.

The median income for a household in the city was $37,074, and for a family was $42,939. Males had a median income of $31,663 versus $25,917 for females. The per capita income for the city was $18,800. Although more traditional dealership models may shy from or exploit deep subprime and subprime credit customers, we at FANTOL plan tor embrace them.

We recognize the gap in our local market and have modelled our business to provide credit to even the riskiest credit consumer. To achieve this, we at FANTOL have partnered with Wellsfargo. The results have been outstanding as FANTOL customer’s default rate has been consistent below estimates, demonstrating a viable long term solution.

3. Our Products and Services

Fantastic Auto Loans (FANTOL) is a used car dealership that sells a breadth of used makes and models. We purchase cars at deep discounts from our local auction house, make the necessary repairs to bring them up to commercial standards, and pass its savings directly to our consumer.

We offer an outstanding shopping experience for customers in Forth Worth, Texas and help our applicants secure excellent loans to purchase competitively priced cars. Our other services include…

• Loan Origination

At FANTOL, we understand the importance of screening loan applicants as it impacts the revenue-generating potential of our company and that of our partners. If loan holders fail to make their payments and default on their debt obligations, bottom-line profit suffers.

During the application process, FICO Scores and credit histories are reviewed before loans are approved. Borrowers with poor credit histories are normally offered reasonable deals that fit their income.

• Loan Processing

Loan documentation is processed and stored according to government standards. This makes it critical for financing agreements to be carefully processed and inputted into databases efficiently. If loan documents are mixed up or inputted into computer applications incorrectly, customers may be improperly charged, and operations will suffer. Once processed, we maintain the loan account to keep cash flows steady.

4. Our Mission and Vision Statement

• Our vision at FANTOL is to establish a used auto dealership with a respectable gross margin in that meets the needs of our customers.
• At Fantastic Auto Loans, we are very dedicated to providing an unparalleled used car shopping experience.
• To offer excellent financing solutions and competitively priced vehicles to those that feel they are out of reach.
• To hold an impeccable reputation for integrity and honest business dealings in our local community.
• To become the destination for all used car purchases.

Our Business Structure

Ephraim Mismark will act as the company president for the first five years for a minimal salary of $38,000 in exchange for his commitment. He comes from a strong entrepreneurial background. He holds a bachelor’s degree in commerce and  has 6 years’ international business experience.

Ephraim started out as a manager at his father’s gas station and later became a managing partner. Soon after, John took his ambitions to Dubai, known as the business hub of the world. There he became a managing director and partner of Saddir enterprise, dealing with vehicles daily. He foresaw an opportunity to take his entrepreneur spirit to the next level.

In July of 2013, the conception of Mismark Motors became a reality. Mismark Motors specialized in purchasing cars from the US, uk and Japan. The car business venture did very well for John, and within a year, FANTOL opened its doors. After four years of owning and operating multiple successful dealerships, Ephraim set his ambitions for America, to come back home to pursue his passion here.

In October 2014, he successfully sold both of his car dealerships in Dubai and set sail for home. Since then, he hasn’t looked back. Aside Ephraim working as the company president, below are other professionals we plan to employ at FANTOL.

Garage Manager

• Human Resources and Admin Manager

Sales and Marketing Manager

• Information technologist
• Accountants/Cashiers
• Maintenance and Secretarial staff

5. Job Roles and Responsibilities

• Boosts management’s effectiveness by recruiting, selecting, orienting, training, coaching, counselling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results
• In charge of fixing prices and signing business deals
• In charge of providing direction for the business
• Establishes, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Charged with signing checks and documents on behalf of the company
• Evaluates the success of the organization

Admin and HR Manager

• In charge of overseeing the smooth running of HR and administrative tasks for the organization
• Tasked with maintaining office supplies by checking stocks; placing and expediting orders; evaluating new products.
• Makes sure operation of equipment by completing preventive maintenance requirements; calling for repairs.
• Defining job positions for recruitment and managing interviewing process
• Carrying out induction for new team members
• In charge of training, evaluation and assessment of employees
• In charge of arranging travel, meetings and appointments
• Oversee the smooth running of the daily office cum business activities
• In charge of managing the daily activities in the car garage
• Ensures that proper records of cars are kept and the garage does not run out of cars
• Ensures that the garage facility is in tip top shape and cars are properly arranged and easy to locate
• Controls distribution and supply chain inventory
• Supervise the workforce in the car garage sales floor
• Takes care of external research and coordinates all the internal sources of information to retain the organizations’ best customers and attract new ones
• Models demographic information and analyze the volumes of transactional data generated by customer purchases
• Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
• Identifies development opportunities; follows up on development leads and contacts
• In charge of supervising implementation, advocate for the customer’s needs, and communicate with clients
• Documents all customer contact and information
• Represents the company in strategic meetings
• Helps to increase sales and growth for the company
• Find out mechanical problems, often by using computerized diagnostic equipment
• Test parts and systems to ensure that they are working properly
• Repair or replace worn parts, such as brake pads and wheel bearings
• Disassemble and reassemble parts
• Use testing equipment to ensure that repairs and maintenance are effective
• Explain to clients the car problems and the repairs done on their vehicles
• Adhere to checklists to ensure that all critical parts are examined
• Do basic care and maintenance, including changing oil, giving tune-ups, checking fluid levels, and rotating tires

Information Technologist

• Manages the organization website
• Handles ecommerce aspect of the business
• In charge of installing and maintenance of computer software and hardware for the organization
• Manages logistics and supply chain software, Web servers, e-commerce software and POS (point of sale) systems
• Manages the organization’s CCTV
• Handles any other technological and IT related duties

Accountant/Cashier

• In charge of preparing financial reports, budgets, and financial statements for the organization
• Provides managements with financial analyses, development budgets, and accounting reports
• In charge of financial forecasting and risks analysis
• Performs cash management, general ledger accounting, and financial reporting
• Tasked with developing and managing financial systems and policies
• Tasked with administering payrolls
• Ensuring compliance with taxation legislation
• Handles all financial transactions for the organization
• Serves as internal auditor for the organization

Maintenance and secretarial staff

• Makes sure that all contacts with clients (e-mail, walk-In centre, SMS or phone) provides the client with a personalized customer service experience of the highest level
• Through interaction with customers on the phone, uses every opportunity to build client’s interest in the company’s products and services
• Manages administrative duties assigned by the human resources and admin manager in an effective and timely manner
• Consistently stays abreast of any new information on the organizations’ products, promotional campaigns etc. to ensure accurate and helpful information is supplied to customers when they make enquiries
• Provides information about warranties, manufacturing specifications, care and maintenance of merchandise and delivery options
• Tasked with cleaning and washing all the cars in the garage at all times
• Ensures that toiletries and supplies don’t run out of stock
• Handles any other duty as assigned by the garage manager

6. SWOT Analysis

At FANTOL, we don’t underestimate the importance of due diligence and adequate research. For instance, when compared to other car market segments, the typical customers who purchased used cars had less income on average. The average annual income for used vehicle buyers was $48,004 compared with $72,992 for leases and $69,875 for new-vehicle buyers.

Among consumers that bought or leased a vehicle, 80.9 percent of lower wage earners are likely to purchase a used vehicle compared to 36 percent of those who lease or buy in the highest income quintile.

We also ascertained that down payments and monthly payment amounts influence whether the consumer will purchase a new or used car. With 76 percent of used-vehicle buyers paid down payments of $1,147 on average and only 30 percent of the amount that a new-vehicle buyer put for a down payment was $2,914 including new car incentives and discounts.

The maximum down payment was $8,500 for lessees, $37,000 for new-vehicle buyers, and $19,000 for used-vehicle buyers. The average monthly payment was $353 for lessees, $399 for new-vehicle buyers, and $273 for used-vehicle buyers. To further emphasize the importance of our findings, below is a summary of SWOT analysis in this industry.

Generally, used car dealers are notorious for unethical sales practices. Customers are inherently cautious and untrusting as a result. The more we can provide a high-quality sales experience, the more successful we will be. All our salesmen will provide a friendly and personal experience for the buyer.

We will also follow up and ensure customer satisfaction. We will rely on these customers for an excellent reference to other car buyers. We at FANTOL plan to build an excellent working relationship with our suppliers and customers.

According to our swot analysis, our major weakness is that used cars are not yet popular due to the lack of trust in durability and state. Also since we are a new car dealership business in Fort Worth and we don’t have the financial capacity to compete with multi – million dollar dealers in the country, we might find it hard penetrating the market.

• Opportunities

The used car sales industry is continuing to grow at or above population increases. Vehicles are the second largest purchase most consumers make, and more people are buying new and used vehicles than ever. Relatively good margins have resulted in some success in the local used car industry

Used car sales in the area are still relatively average in size. Dealers have varying degrees of success based primarily on location, products, and the sales team assembled. Quality sales personnel are usually not adequately compensated for their services, and as a result they tend to move from one dealer to the next.

Just like any other business, one of the major setbacks that we are going to face at FANTOL will be convincing people to patronize our services. But we believe that the opportunity we have in this industry far outweighs this threat. Another threat that might befall our business according to our SWOT analysis will be the arrival of a new car dealership outlet in the same location where ours is located and even online.

7. MARKET ANALYSIS

• Market Trend

At FANTOL, we’re bound to be affected by forces and trends in the market, which include…

Simple, Streamlined Online Financing Environments 

Right before the internet, customers trusted auto lenders to offer them the fairest loan structures possible. After all, it was all but impossible for customers to compare loans without going through a long application process with multiple lenders.

But in this modern era, customers can access this information online within seconds. With a little internet sleuthing, they can estimate the terms of a loan with a fairly high degree of accuracy. Customers are savvier than ever and want to feel like part of the decision-making process from the start.

The more reason modern lenders need streamlined, reliable online systems and loan origination software (LOS) for structuring loans. This has benefits for both customers and lenders.

• Customers benefit from online auto financing application systems that give them a quick answer. They want to know whether they’re eligible for a loan and don’t want to wait days or weeks for a final decision.
• Lenders benefit from faster processing and response times. Automated decisions and loan structuring enables them to approve or deny online applications within minutes.

Artificial Intelligence and Machine Learning for Auto Lending

The use of artificial intelligence (AI) and machine learning algorithms to structure loans is another trend we consider greatly at FANTOL. In the past, these features were very expensive and required a complete overhaul of the IT strategy and infrastructure.

Now, we can easily leverage this innovative technology in the cloud with help from experienced LOS vendors. Artificial intelligence and machine learning enable auto lenders to assess risk and identify ideal borrowers with incredible accuracy. This technology learns from historical data to predict the likely outcome of any given loan. Lenders can use this technology to:

• Determine whether an applicant is likely to be delinquent or fraudulent;
• Assess creditworthiness using both traditional credit data and alternative credit data;
• Calculate collateral value;
• Accurately value used vehicles based on historical data;
• Identify target audiences for certain types of auto loans (e.g. used cars or new vehicles);
• Track capture ratios and approval rates to meet key performance goals;
• Conduct customer surveys to identify hidden bottlenecks in the system; and
• Predict customer behaviour and offer vehicles that customers actually want.

Moving to Subscription and Shared-Ownership Models

Another trend is subscription and shared-ownership car loans. Years ago, the only option that customers had was to finance a single car from a lender. This structure didn’t work for every customer, especially those who rarely drive or subprime borrowers who can’t afford a traditional car loan.

People who live in large cities feel especially frustrated by a lack of diverse car loan options. As major cities in the united states grow, available parking also grows scarcer. Additionally, bumper-to-bumper traffic discourages many residents from driving at all.

For these reasons, many city residents are looking to provide rideshare services, move to a subscription lending model, or even share car ownership. A rideshare service is a way for car owners to provide rides to people who don’t own cars in exchange for payment. We are looking into providing different types of loans for customers who perform rideshare services, as these.

8. Our Target Market

Everyone needs a car, some even two or more cars. Owing to the recent success of the new car market, there is a large inventory of used cars available for re-sale. Our market will consist of four basic segments; students, retired, families, and singles. First, students will include high school and college age students who need a safe and economical car.

We believe that this group is concerned with price, flashy looks, and being cool. These drivers tend to be less educated and will buy on impulse paying more for fewer cars. They will also buy cars more often than others, on average every two to three years.

Secondly, the retired group will focus more on practicality. Cost may be less important than quality and features. This group wants comfortable, nicely equipped vehicles at a reasonable price. They will want a vehicle that will last for years. Thirdly, the family segment will focus on safe, practical vehicles. Something that will last for years, can fetch groceries, carry the kids, and perform long trips. Many will be on a budget, and price may be a big factor.

They will shop around and educate themselves on vehicles, shopping for a specific make or model. Lastly, the singles are similar to the students in that they want flashily cool cars, but may be working professionals who can afford to pay more for a higher-quality vehicle.

Our Competitive Advantage

FANTOL will be located on a prime lot right off Sundance Square, which runs through the heart of downtown Fort Worth. We boast of a very easy to navigate website with an online credit approval form that is linked to the business email.

FANTOL will cater heavily to potential customers with bad credit that have been rejected for car loans everywhere else due to lack of credit or significant down payment. The approval success rate is over 90 percent and adding to a large customer referral base. We plan to leverage the following advantages:

• Little or no down payment required to purchase
• Ease of credit access
• Ability to service the Deep-Subprime and Subprime used cars consumers market
• Liabilities are held with Wellsfargo
• Large inventory of cars on our website for easy viewing, with inventory updated every few days.
• Located in prime busy location on a main street in Fort Worth, Texas.

9. SALES AND MARKETING STRATEGY

• Source of income

Most of our inventory will be bought in advance to stock the showroom floor and to outfit company worker. FANTOL is expected to grow in sales at a rate of 14 percent per month, starting from the conservative estimate of twelve cars sold.

We will generate revenue by originating loans and managing receivable portfolios. We will generate revenue off the loans and also finance operations by bundling loans as collateral for asset-backed securities that are sold to clients.

10. Sales Forecast

We at FANTOL expect our normal monthly running costs per month, which include our full payroll, lease, marketing, utilities, and an estimation of other running expenses to remain consistent. We expect sales to rise at a slow rate per month for each product in the first year.

From June through September we expect minimal growth during our start-up period. October through December we expect decreased sales due to historical trends, and depreciation in value based on less demand. February through August we expect increased sales growth again.

in 2023 and 2022, we expect solid steady sales growth as industry experts claim a larger market share. We expect increased sales in lower-priced vehicles, and this will be our primary product that yields the highest margin. At FANTOL, we feel this sales forecast is realistic based on the market analysis of similar businesses performance.

The opportunities for used car sales have increased with the high sales of new vehicles, increasing the number of quality late model used vehicles in the market. More new car buyers directly affect the number of used cars available. The current low interest rates also have a positive impact on the high-end vehicle purchases.

The population growth in the area creates a need for more vehicles as well. Meanwhile, the risks involved with this forecast include technology and the need for low impact environment friendly transportation.

Older used cars tend to be less efficient, and will become less popular. Current hybrid vehicles are priced extremely high, and car makers have not found an economical answer for consumers. We estimate conservative earnings from selling extended warranties and from selling loans.

• Marketing Strategy and Sales Strategy

At FANTOL, we will implement a strategy that treats customers as a community. This means our marketing resources will be centered on advertising both sales promotions (events) and personal sales (customer service, friendly atmosphere).

• Budget and Direction

Our marketing budget will not exceed ,000 per year and all marketing strategies will be consistent with the Mission Statement and support the following objectives:

• 100 percent customer satisfaction, measured through repeat customers, referrals and surveys.
• To achieve a respectable profit margin within the first three-years.
• To achieve a healthy net profit by year two.

As with any service oriented business, FANTOL will benefit from developing business relationships by participating actively in community events. We will also attend a variety of events to gauge prospective clients, including fairs and trade shows.

• Word of mouth

Referral marketing will be an integral part in maintaining long lasting relationships and increasing brand awareness. Current clients will increase leads by word of mouth advertising, which is considered the most effective and trustworthy form of advertising.

Independent sites drive roughly half (45 percent) of all dealer walk-in traffic by the internet, followed by dealer sites (32 percent), search sites (14 percent), manufacturer sites (6 percent) and other sites (3 percent). FANTOL will be heavily advertising on well-known internet sites that potential buyers frequent including Craigslist, Facebook and Yelp.

11. Publicity and Advertising Strategy

Promotion strategies will differ depending on the target market segment. Due to the importance of word-of-mouth/referrals among all market segments when choosing a used auto dealership, we have put together plans to create awareness, stimulate trial, and build referrals.

A cost effective campaign, focused on direct marketing, publicity, Internet web page, and advertising is being proposed. Our publicity and advertising strategy was effectively and carefully designed to communicate our brand. Below is how we plan to promote FANTOL;

• Put adverts on community based newspapers, radio and TV stations
• Encourage the use of word of mouth publicity from our loyal customers
• Make use of the internet and social media platforms like YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Google+ and other platforms to promote our business.
• Make sure we position our banners and billboards in strategic positions all around Fort Worth
• Share our fliers and handbills in target areas in and around Fort Worth
• Advertise our used cars dealership business in our official website and employ strategies that will help us pull traffic to the site
• Brand all our official cars and trucks and ensure that all our staff members wear our branded shirt or cap at regular intervals

12. Our Pricing Strategy

At FANTOL, our pricing strategy will be based on competitive values (wholesale and retail) plus vehicle handling fees. We will not exceed competitive retail prices, and will attempt to sell at wholesale plus a fair profit, generally 15-25 percent.

We strongly believe that quality and price say a lot about our vehicles. The vehicles that are rare or not readily available to meet demand will be priced accordingly. The average industry mark-up for similar vehicles is 20-30 percent.

• Payment Options

For both business and consumer clients, FANTOL will be well positioned as a used car sales and financing company. But unlike products which are produced, then distributed and sold, car sales are produced and consumed simultaneously in a real-time environment.

This is why we plan making the services available in a convenient manner to the most number of potential clients. FANTOL will maintain extended hours and meet with clients in their home or office, whichever is more convenient. This flexibility is especially attractive to elderly customers. Car buyers can contact FANTOL by telephone, fax, and e-mail.

We also anticipate a 20 percent markup over car obtained from dealer auctions and fleet companies. Our bank account numbers will be made available on our website and promotional materials so that it will be easier for clients to make payments when necessary.

13. Startup Expenditure (Budget)

At FANTOL, with a diverse workforce and well experienced board members, we hope to create a classic business that will invest residual profits into the company expansion. We went through a great deal of hurdles to estimate our startup costs and overheads for the next three years.

It is believed that all new entrants in the industry operate with negative profits through the first two years. We at FANTOL plan to avoid that kind of operating loss by understanding our markets, our competitors, industry direction, and the products we sell. Outlined below are the ways we plan spending our start-up cost;

• The Total Fee for Registering the Business in Cincinnati: $900.
• The budget for insurance, permits and license: $10,000
• The Amount needed to acquire a suitable Facility for 6 months in Oklahoma (face lifting of the facility inclusive): $75,000.
• The Cost for the purchase of furniture and gadgets (fridges, TVs, Sound System, tables and chairs et al): $20,000.
• The Cost for Equipment: $15,000
• The Cost for inventory : $3,000,000
• The Cost of Launching a Website: $900
• Our marketing and publicity budget – $250,000
• The cost for our opening party: $6,000
• Additional Expenditure (Business cards, Signage, Adverts and Promotions et al): $7,000

From our detailed analysis above, we will need $3,384,800 to start FANTOL. We have also put plans in place to be able to raise the funds and capital.

Generating Funding/Start up for FANTOL 

FANTOL is owned by Ephraim Mismark and he will be the sole financial of the business which is why sourcing of the startup capital for the business have been restricted to just three major sources.

• Generate part of the startup capital from personal savings and sale of stocks
• Generate part of the startup capital from friends and other extended family members
• Generate part of the capital from the bank (loan facility).

Note: Ephraim Mismark have been able to raise $2,000,000 ($1,600,000 from the sale of his two car dealership businesses and $400,000 from his friends and family as soft loan), and we are at the final stages of obtaining a loan facility of $1,000,000. We have verified all the necessary procedures to actualize or get our startup cost.

14. Sustainability and Expansion Strategy

Our strategy to build customer sales includes telemarketing, encouraging and rewarding present clients to refer future clients. Sales programs will include sales awards for the highest sales, bonuses, and customer service awards for those employees who best exemplify Integrity’s commitment to customers.

At FANTOL, we will provide quarterly training and educational opportunities by sending employees to professional development training for their respective areas. We also depend on our alliance with local new car dealers and auction houses to maintain our inventory. This relationship is crucial to our success and will be placed ahead of petty differences.

We plan to make sure that all financial relations with these groups will be handled in a timely and accurate manner. We need to make sure that the personnel, and especially the ownership, of our allies are aware of our support and reciprocation. We will also depend on outside sources for professional development of our sales staff.

We focus on providing for the average car buyer first. Our focus will be on those most likely to purchase low-end, low-cost vehicles (highest profit margin). The students, families, retired, and singles have very different needs and wants. We will focus on each group separately, and prioritize our efforts.

We will look at every customer as a potential repeat customer, reference, or spokesperson for other car buyers. Also objectives have been set for FANTOL so that actual performance can be measured against them. Each subsequent year, new objectives will be set for these benchmarks, and actual performance will be measured against them.

If actual performance falls short of objectives, investigation will be made into the cause, and plans will be adjusted accordingly. We at FANTOL will keep track of the source of all new clients so as to measure the effectiveness of each type of promotion. Each subsequent year’s budget should adjust spending accordingly.

Checklist/Milestone

• Business Name Availability Check: Completed
• Business Incorporation: Completed
• Opening of Corporate Bank Accounts : Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of Insurance for the Business: Completed
• Conducting feasibility studies: Completed
• Leasing, renovating and equipping our facility: Completed
• Generating part of the startup capital from the founder: Completed
• Applications for Loan from our Bankers: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents: In Progress
• Design of The Company’s Logo: Completed
• Printing of Promotional Materials: Completed
• Recruitment of employees: In Progress
• Purchase of software applications, furniture, office equipment, electronic appliances and facility facelift: In progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business (Business PR): In Progress
• Health and Safety and Fire Safety Arrangement: In Progress
• Establishing business relationship with banks, financial lending institutions, vendors and key players in the industry: In Progress

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Business auto loans: What they are & how to get one

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Key retirement financial advisor takeaways

• Business auto loans let you finance a vehicle for company use.
• These loans are available through banks, credit unions and online lenders.
• Like standard auto loans, they are secured and use the vehicle as collateral.
• If you can't get approved for a business auto loan or prefer to explore alternatives, try leasing a car or taking out a small business loan to fund the purchase.

If you can’t pay cash for your company car, it’s worth exploring business auto loans. These loans and the application process share many similarities with personal auto loans. As with standard auto loans, your vehicle secures the loan — the lender can repossess it if you fail to make loan payments.

Lenders will want reassurance that you’re using the vehicle for business purposes, but the upside is you could qualify for a few tax breaks. Here’s what to know about business auto loans, how to get one and if you should consider alternative funding sources.

What is a business auto loan?

A business auto loan is a secured loan . It can finance purchasing a new or used vehicle for business purposes. Banks, credit unions and online lenders offer these loans. The cost of borrowing varies by lender and your financial profile.

Lenders set their approval guidelines for these loans. They may require your business credit score, personal credit score or both to meet certain thresholds. They may also set a minimum time in business and annual revenue.

Some will allow you to take out the loan in your company’s name, but you may need to provide a personal guarantee , which means your assets could be at risk if you default on the payments. Depending on the lender, you may be required to use the vehicle solely for your business.

This restriction has an upside. You can deduct more of your interest on a vehicle you use only for a business than one used partially for personal needs. Plus, you may be eligible for the standard mileage deduction to get a break at tax time. Consult with a reputable tax professional to learn more and determine your eligibility.

Should I lease or buy a business vehicle?

Instead of buying, you can also lease a vehicle for your business. Leasing could be better if you don’t plan to keep the vehicle long-term and qualify for a lower monthly payment. Leasing still allows you to access certain tax benefits .

But if you know you’ll need to make significant alterations to the vehicle or plan to drive it a ton, a lease likely isn’t a good fit. This is also the case if you prefer to own the vehicle for an extended period and may want to explore the possibility of an extended loan term to make the monthly auto loan payments more affordable. Consider if the mileage and usage restrictions work for your situation.

How to get a business auto loan

• Set a budget: Whether you’re buying a new or used vehicle, calculate how large of a monthly payment your company can afford. It’s equally important to factor in the overall cost of the vehicle so you’ll know what to expect. Use the business loan and interest rate calculator to simplify the process.
• Review your credit: Check your personal and business credit scores and reports to identify errors. File disputes with the respective credit reporting agencies to ensure your score accurately reflects your credit history when you apply for financing. It can take up to 30 days for a creditor to respond, so review your credit well before you want to buy. Higher scores and a clean credit history can help you qualify for a lower interest rate.
• Choose a vehicle: Look at available options and decide on the type of company vehicle that best suits your needs. Remember that some lenders may only finance new vehicles, while others may have tight restrictions on the used vehicles they finance. It’s best to know exactly what you’re looking for before exploring lenders.
• Get preapproved: Shop around with at least three different lenders . If the lenders offer preapproval, apply to view potential loan offers. Doing so helps you compare offers to find the best deal on commercial vehicle financing. Some lenders may require that you provide documentation proving you own the company before issuing loan preapproval.
• Provide documentation: You may need to provide your employer identification number , Social Security number, business license and financial information. The lender will also likely request personal documents proving your personal income and creditworthiness.

Where to get a business auto loan

If you’re ready to research business lenders, you have two primary options: brick-and-mortar lenders and online lenders.

Brick-and-mortar lenders

Traditional banks, like Bank of America , offer loans with competitive rates and repayment terms between 48 and 72 months. These loans typically come with mileage and vehicle age restrictions.

Credit unions also feature commercial vehicle loans, and the rates are often more competitive than those of a traditional bank. The process can be lengthy with either option, and you’ll typically need to provide a lot of paperwork.

Online lenders

While not as strict as bank lenders, online lenders generally still require that you have a reasonable credit score and meet the minimum time in business guidelines. Some also impose restrictions on vehicles that can be financed. Still, you may find it easier to qualify, and the interest rate ranges are often comparable to a bank or credit union.

One such lender is National Funding — it offers loans for commercial vehicle purchases and leases to business owners with a credit score over 600 who’ve been in business for at least six months.

Alternatives to business auto loans

Going with a business auto loan isn’t your only option, though. Here are three alternatives that could help you secure the car your business needs.

• Small business loan: You can finance a vehicle with a small business loan or business line of credit .
• Consumer auto loan: A consumer auto loan could be better if you use the vehicle for personal and business purposes. These can be easier to secure, but you put your personal credit on the line rather than your company’s.
• Leasing: The car won’t be an asset your business can claim, but there are ways to incorporate the cost into your taxes to save money when you file. It may also be less expensive on a month-to-month basis, depending on the financing terms you qualify for.

The bottom line

When you’re ready to finance a vehicle for your business, take time to compare your options and get rate quotes from at least three lenders. Interest rates have significantly increased in the past years, but by doing your homework, you give yourself the best chance at finding a business auto loan with terms that work for your company’s financial situation.

Related Articles

What is an auto loan? Where do you find them? And how do they work?

Business loan vs. personal loan: What’s the difference?

How to get a fast business loan

How to get a business loan with bad credit

Business Auto Loans

Financing available at low rates, business advantage auto loans, requirements:.

• Minimum 2 years in business
• Minimum vehicle value of $10,000
• Maximum vehicle age of 5 years
• Less than 75,000 miles

Limited-time Offer:

• Exclusive incentives with the purchase of a new Mercedes-Benz vehicle. Learn more " aria-label="Footnote 3"> Footnote [3]

Advertised as low as APRs (annual percentage rates) are effective as of March 5, 2024 are subject to change and assumes excellent borrower credit history. Your actual APR may differ based on your credit history, approved loan amount, term, state of residence and applicable discounts, such as Preferred Rewards for Business. These discounts will be reflected in your individual APR quote if you are approved for a loan. Subject to credit approval; some restrictions may apply. Example: A 5-year, fixed-rate new car loan for $47,000 would have 60 monthly payments of $931 each, at an annual percentage rate (APR) of 6.99%.

Calculate your monthly loan payment

* Important note about this calculator: The figures entered on the input page of this calculator are for hypothetical purposes only. You should enter figures that are appropriate to your individual situation. " aria-label="Footnote 4"> Footnote [4]

Estimated monthly payments

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Applying is easy, apply online.

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Go get your vehicle

Upon approval, receive a check made payable to the seller or dealer.

Financing is easier at authorized dealers

Need a commercial vehicle.

Vehicles over 2.5 tons can be financed through a Bank of America Equipment Loan.

Talk to a small business specialist » about a commerical vehicle loan.

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Find out if leasing is right for you.

Talk to a small business specialist » about leasing.

So much more than a loan

Expert insights.

Explore financing options and cash flow strategies on Small Business Resources .

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Cars are expensive purchases and as such auto loan companies exist in order to provide the necessary capital in order to purchase cars. As such, these businesses are relatively immune from negative changes in the economy. These businesses generate extremely high gross margins from the ongoing interest that is paid for vehicle loan as well as closing fees that can be acquired at the time the vehicle is purchased. Typically, most auto loan companies usually start their operations with the capital base ranging anywhere from $2 million to $10 million depending on the number of loans that will be immediately issued at the onset of operations. Of course, this number may be substantially higher if there are third-party institutional buyers standing by to purchase the close automotive loans. This is one of the additional ways that these companies generate significant revenues via the sale of seasoned auto loans. The barriers to entry for this type of business are very high. This is due to the fact that there must be a number of regulations that must be dealt with in addition to having the appropriate amount of capital on hand in order to issue automotive loans.

Most investors are happy to provide a significant amount of capital to automotive loan companies given the high gross margins generated on a monthly basis. The economically secure nature of these revenues also ensures that there is a strong return on investment coupled with having a significant collateral base. As with any business that is looking to raise capital a business plan that contains a three-year to profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page should be developed. Additionally, within the business plan – the automotive loan company credit procedures, protocols, and disbursement manual should be included as well. Most funding sources are going to want to see what collateral and credit standards will be used during the automotive lending process. Beyond this information, a full analysis regarding graphics, median household income, median family income, population density, population size, and competitive information should also be included. As many people now use the Internet to acquire auto loans it is imperative that this demographic analysis is extremely broad so that a very large number of potential borrowers can be targeted via the company’s operations.

After the business plan is developed is time to establish the auto loan company marketing plan. This is one of the most complex aspects of the business planning process given that there are thousands of specialty finance companies, banks, and private funding sources that provide auto loans to borrowers. Again, the high gross margins and strong collateral of these debt instruments has driven a significant amount of competition into the industry. One of the foremost aspects of the marketing plan should focus on online marketing. This includes having a proprietary website that allows users to fill out a lending application very quickly. It is important that this website have the proper functionality in place so that the credit check can be immediately completed once a borrower submit their application for an auto loan. One of the other ways that these businesses draw borrowers is through the use of social media. These days it is very important to have an expansive presence on social media platforms such as FaceBook, Twitter, Google+, and others in order to increase the visibility of the auto loan company brand name. This is going to be one of the primary ways that these companies need to continue to do their operations moving forward.

Frequently developed is the auto loan company SWOT analysis. This analysis focuses on the strengths, weaknesses, opportunities, and threats that are commonly found among these companies. As it relates the strengths, and auto loan company is able to put juice highly recurring streams of revenue from interest. Additionally, these companies can produce secondary income from close closing fees as well as the sale of seasoned loans to institutional buyers. For weaknesses, auto loan companies have a significant number of regulations as it relates to lending that they need to adhere to on a day-to-day basis. Also, there is a significant amount of competition within this industry. For opportunities, most auto loan companies expand their operations by acquiring additional rounds of capital that allow them to increase the number of loans that go through their pipeline. Pertaining to threats, there are no pieces of legislation that would impact the way that an auto loan company conducts business at this time. However, there may be changes in regulations as political shifts in the United States occur. It is important that appropriate legal counsel is retained in order to ensure that the auto loan company complies with the law at all times.

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10 Best Business Auto Loans 2023

Data as of 7/11/22. Offers and availability may vary by location and are subject to change.

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The bottom line: Most business owners looking for an auto loan should start with Lendio . Lendio’s lending marketplace lets you compare loan offers to get the best deal on your auto loan.

Lendio is our top pick for small-business auto loans, but it’s not the only lender you can use to find a business auto loan. We analyzed dozens of lenders―including banks and online lenders―to find the top 10 business auto loans. Business auto loans have all the advantages of other kinds of equipment loans, like lower interest rates and more flexible borrower requirements, so let’s walk through some of your best loan options below.

Best business auto loans

• Lendio : Best overall business auto loans
• Balboa Capital : Best for fast funding
• Crest Capital : Fewest vehicle restrictions
• Bank of America : Lowest rates
• U.S. Bank : Best for pre-approval

Compare the best business auto loans

How to get a business vehicle loan.

Ready to buy a vehicle for your business, but not sure how to get started on the loan process? These are the basic steps.

1. Choose a vehicle.

For starters, you’ll want to figure out what kind of vehicle you need―and where you plan to buy it.

Remember that most lenders only finance vehicles in good condition. And you’ll have a hard time getting an auto loan for a vehicle older than five years or with high mileage. That’s because your vehicle will double as collateral for your loan―which means your lender wants to make sure your vehicle actually has some value.

2. Find the right lender.

Once you have an idea of how much money you need (and how fast you need it), you can look for a lender.

Consider factors like loan amounts, interest rates, funding times, and loan terms. But don’t forget about borrower requirements. Lenders have credit score, revenue, and time in business criteria. Since you don’t want to waste time on an application that goes nowhere, look for lenders that accept your borrower qualifications.

3. Submit a loan application.

When you have a vehicle and a lender picked out, you can apply for your business auto loan.

Most lenders accept online applications, making things easier for you. Just note that your lender may expect to see business documents like tax returns and bank statements, so keep those handy while you apply.

With any luck, your business auto loan will get approved, and you’ll get the vehicle you need. 

For more details on how to get a business auto loan, check out our guide to getting and using equipment loans .

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Lendio: Best overall business auto loan

Lendio has the best business auto loans for most business owners.

That’s because Lendio is a lending marketplace , meaning it matches you with lenders in its lending network of more than 75 traditional and alternative lenders. So whether you need a large auto loan for your commercial fleet or a small one for a single car, Lendio can help you find a lender.

On the chance you don’t qualify for a car loan, Lendio can match you with other kinds of financing—like lines of credit, term loans, merchant cash advances, and more.

Even better? Lendio’s matchmaking doesn’t make more work for you. You just have to fill out a short application, and Lendio will get to work. Within a few days, you’ll get a list of loan offers―and at that point you’ll choose your favorite lender and finalize your loan application.

Now, Lendio does require some patience. Its matchmaking process can take a day or two, making Lendio a little slower than applying directly with a lender. And you won’t always get matched with exactly the loans or lenders you want―so you’ll need to carefully consider the loan offers you do get.

But with many lenders and loans in its lending marketplace, Lendio offers the best place for small-business owners to get a business vehicle loan.

Balboa Capital: Best for fast funding

Need your vehicle right away? Apply with Balboa Capital for fast funding.

Loan applications, approval, and funding can take time―days or even weeks. But Balboa Capital speeds things up. It offers one-hour approval times on equipment loans, so you can know right away whether or not you’ll get funding. And if you get approved, Balboa Capital can often fund you the very same day. Before you know it, you’ll be driving off in your new business vehicle.

We have to tell you, though, that Balboa Capital doesn’t publish its interest rates, which is a pet peeve of ours. Sure, it promises competitive interest rates (and all Balboa Capital’s positive customer reviews back that claim up), but you’ll have to judge those rates for yourself when you get a car loan offer.

Fortunately, with Balboa’s Capital fast approval and funding times, you won’t have to wait too long on that auto loan offer.

Crest Capital: Fewest vehicle restrictions

Considering an older or higher-mileage vehicle? Then you should apply with Crest Capital.

Most equipment lenders have strict standards for what kinds of vehicles they’ll fund―think age limits and mileage restrictions. But Crest Capital will fund older vehicles and high-mileage trucks with no issue. Likewise, Crest Capital doesn’t mind if you work with a private seller instead of a dealership. In other words, Crest Capital offers a lot more flexibility when it comes to vehicle choice.

Unfortunately, that flexibility doesn’t extend to passenger cars. Crest Capital simply doesn’t finance those. But everything else, from vans to pavers to dump trucks, is totally fine.

Like Balboa Capital, Crest Capital says it has competitive rates―but it doesn’t specify what those interest rates are . Still, given all the vehicle types and conditions Crest Capital will fund, it’s an auto lender worth considering.

Bank of America: Lowest interest rates

Looking for low rates on your car loan? You’ll find them at Bank of America .

Bank of America consistently offers some of the lowest interest rates around, and its business auto loans are no exception. Right now, Bank of America offers business auto loans that start at less than 5% APR ( annual percentage rate ), making them very affordable. And sure, those rates can fluctuate over time―but we’ve always found that Bank of America offers plenty of value.

Now, you will need to take part in Bank of America’s rewards program to get its lowest interest rates. This program requires you to keep a lot of money in Bank of America bank accounts . You’ll also need to meet its fairly stiff borrower requirements.

If you’ve got the revenue to do those things, though, Bank of America can offer you unbeatable rates on your business auto loan.

U.S. Bank: Best for pre-approval

Prefer to get pre-approved before shopping for your business vehicle? That’s no problem with U.S. Bank.

U.S. Bank can pre-approve you for auto loans up to $500,000―giving you plenty of budget to find the perfect vehicle for your small business. And U.S. Bank can offer even larger loans if you need to, say, build up your commercial fleet. Either way, you can expect the low interest rates typical of traditional banks.

That said, U.S. Bank is another lender that doesn’t publish its interest rates or borrower requirements. Plus, as a traditional lender, U.S. Bank gets pretty bad customer reviews―so you’ll need to feel comfortable working with a not-so-loved lending company.

Still, U.S. Bank’s pre-approval on auto business loans means you can streamline your car shopping process.

Browse hundreds of loan options, custom-tailored to your business and budget needs, from a single, simple platform.

Honorable mentions

Our five picks above have the best auto loans for most businesses―but not all. So if you haven’t found the right lender just yet, take a look at these other options.

• SmartBiz : Honorable mention
• CAN Capital : Honorable mention
• National Funding : Honorable mention
• Ally Bank : Honorable mention
• Capital One : Honorable mention

Honorable mention business auto loans

If you’ve thought about using SBA 7(a) loans to fund your auto purchase, we recommend getting one through SmartBiz. It’s another lending marketplace, but it specializes in SBA 7(a) loans. That means it makes the (traditionally) long, painful SBA loan application process slightly less long and painful.

Of course, even SmartBiz’s SBA loan process takes a week or more―meaning you really need to plan ahead if you want to use an SBA 7(a) loan to buy a business vehicle.

CAN Capital

CAN Capital is an online lender offering equipment loans that you can use for business vehicles. It offers fairly quick loan approval times (within 24 hours) and funding times (the same day, in some cases). Plus, CAN Capital accepts lower credit scores than the lenders listed above.

You should expect to pay more for an online lender like CAN Capital―though we don’t know exactly how much more, since it doesn’t list interest rates. We’d suggest sticking to other lenders if you can and using CAN Capital as a backup.

National Funding

Got bad credit? National Funding can still help you get a business auto loan. It has the lowest credit score requirements of any lender on our rankings―accepting FICO scores as low as 575. National Funding also works with young businesses (as young as six months), unlike most other lenders.

But as with other alternative lenders, expect National Funding to cost more. It doesn’t list interest rates, but lenders that accept low credit scores tend to cost quite a lot. Still, if National Funding helps you get a vehicle that builds your small business, the higher cost might be worthwhile.

Ally Bank offers funding for all kinds of commercial-use vehicles, from single trucks and vans to funding for a whole fleet. It can also help finance modifications and fit-ups (like adding tow equipment) to your business vehicles.

Unfortunately, Ally Bank doesn’t publish any other details about its loans―no loan amounts, interest rates, borrower requirements, or anything else. And you’ll have to use a dealer that already has a financing relationship with Ally, which could limit your options.

Capital One

Capital One is another traditional bank that offers vehicle loans to small-business owners. And it’s another lender that doesn’t provide any details about those loans. As a traditional lender, we can guess that Capital One offers excellent interest rates―and that it expects high credit scores from its borrowers.

But ultimately, you’ll need to get in touch with a Capital One business banker to get more details on its business auto loans.

The takeaway

Most business owners will get the best business auto loan through Lendio . Its lending marketplace can help you shop around for the best deal you can get―even if it’s not an auto-specific business loan.

For faster funding, apply with Balboa Capital to get same-day approval and funds. Crest Capital can help you finance older, higher mileage vehicles than other lenders. You’ll find the lowest interest rates at Bank of America . And if you want pre-approval before vehicle shopping, U.S. Bank has you covered.

Before accepting a business auto loan offer, make sure you can afford it with our business loan calculator .

Related reading

• Best Equipment Financing Companies and Loan Options 2023

Best Small Business Loans

• The Difference Between Leasing and Financing Business Equipment
• How to Get a Small Business Loan in 7 Simple Steps
• What Is a Lien and How Does It Work?—What Small Businesses Should Know

Methodology

We looked at dozens of lenders to find which ones offered auto-specific business loans. Then we graded those lenders on many factors, from interest rates to customer reviews. We used those grades to come up with final scores for each lender―and those scores, in turn, helped us rank and review the best auto loans for business.

Business auto loan FAQ

Bank of America offers the best commercial vehicle financing, thanks to its extremely low interest rates.

We found that Lendio is the best company for auto loans for business, since it lets you compare offers from multiple lenders.

Can I get a car loan with my EIN number?

Yes, you can get a car loan with your EIN number―as long as it’s a car for business use.

Can you finance a car through your business?

Yes, you can finance a car through your business. Just make sure you use the car primarily for your business―not personal use.

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How To Write a Business Plan For a Loan | Money

G etting the funds you need is a critical step for any new business . Many startups rely on business loans to get off the ground, but securing that loan hinges on a strong business plan . This plan acts as a roadmap for your small business by outlining your goals, strategies and financial projections . It convinces lenders of your viability and increases your chances of getting approved.

While writing a business plan might seem intimidating, understanding its key components and how lenders evaluate them can empower entrepreneurs to create a persuasive document. Here’s what you need to know.

Do you need a business plan to get a loan?

Absolutely. A business plan is essentially a detailed loan proposal. It addresses the questions lenders have about your business, showcasing its potential and your preparedness. It demonstrates the time and effort you’ve invested in planning and research, building confidence in your venture.

If you want to borrow money to fund your company, then, you need a business plan that’s detailed and requires a plethora of information. It tells the lender the business type, target market, strategies and more. It also reveals how you plan to make money, your projected expenses and expected revenues. Before taking on this challenging task, you must learn how to write a business plan .

Key elements of loan-focused business plan

Creating a business plan for a loan takes time, thought and effort. And it needs to contain the following components:

Executive summary

Even though the executive summary is the first paragraph in a business plan , it’s the last section you should write. The executive summary summarizes the main points of your plan and tells the lender why it should invest in your business idea . It’s a snapshot of your business’s highlights and states how much money you want to borrow.

You can choose a business plan template for loan requests to simplify the plan’s writing process instead of starting from scratch. Many templates suggest including your mission statement in the executive summary . The core goal of this initial section is to spark the lender ‘s interest in your company. If you can do that, the lender will continue reading it.

Company description

This section tells the lender your business type and the industry it’s in. It allows business owners to highlight their previous work, jobs and skills to demonstrate experience in the field. It states where your business will operate and who will run the company.

This section also provides the ideal opportunity to explain your commitment to the startup . Be as transparent and detailed as possible when describing this new endeavor. The number one goal of this section is for the lender to fully understand what your business does. Describing the business model you plan to use is also helpful, along with the growth plan you propose if you are successful.

Products or services

Every business sells products, services or a combination of both. Selling something — whether it be a product or a service — is how a business generates revenue. Start by describing in detail what your business will sell. Next, highlight the features that set your products and services apart from those of your competitors. List the patents or copyrights of your goods, if applicable, and list the things your business needs to operate. For example, you might need a building from which to operate or equipment to produce products.

Market analysis

Creating a business that offers a unique product or service is nearly impossible today. As a result, your business will likely compete with other businesses. You must address this by presenting a competitive analysis of your venture’s business goals and how it will stand out from others in the field.

What other local businesses have similar products or services? How do you plan to attract some of this market? Do you own relevant intellectual property that may help you to achieve success?

Include the results of your market research in the market analysis section of your business plan . You might include some details about your target customers, such as their demographics, and your planned pricing . Finally, include a brief synopsis of your marketing plan in this section..

Competitor analysis

Lenders want to know if your business will succeed before they approve your loan proposal. Therefore, they want to know that you’ve thoroughly researched your competition. You can list your competitors in this section, including their products and services, and what you see as your competitive advantages over them.

Next , give a more detailed analysis of what differentiates your services and products from theirs. What is unique about your company? What advantages will your company have over its competitors? Keep in mind that lenders base loan decisions on risk levels. If the lender can’t see the need for your business’s products, they might turn down the loan. The goal of this section is to convince the lender that there is a demand for your company’s products and services..

Marketing plan

Next , include specific details about your marketing strategy , including financial plans . How much money will you spend on marketing efforts? What methods will you use? How do you know they’ll be effective? Marketing is a massive part of a business strategy, so your plan must answer these questions.

Operational plan

The operational plan explains how you’ll execute your business startup to the lender . It reveals more details about your company’s location, its target market and the equipment and software you’ll use. Additionally, it explains the processes you’ll use to produce or sell your goods.

Management structure

A business plan must also list your management team . You might be the sole owner of the business, but will you work alone? If not, who will work for you?

Not only should you list colleagues’ names, but you should also describe each person’s experience, skills and qualifications. Additionally, explain staffers’ roles, duties and responsibilities and the hierarchy of the management structure.

Funding request

The purpose of writing a business plan is to request a loan. Therefore, you must include your funding requirements in the business plan . How much money do you want to borrow? How will you spend it? You should explain in detail how you will spend the funds, as this validates your need for the loan. The lender can see if you have a clear plan and if the plan makes sense.

Financial projections

This next section outlines your company’s projected profitability, which is vital for repaying the money you borrow. Lenders spend a lot of time reading through the financial parts of a funding request .

When writing this section, begin by stating your projected annual revenues for the next three to five years. Next , include income statements to highlight your company’s potential net profits. You can also include forecasted balance sheets , which help the lender see your assets, liabilities and capital. Graphs and other elements can be useful in this section.

Be sure to cover how business financing will allow your plan to flourish. Including a break-even report is helpful. This metric reveals how much you must sell to cover your expenses. For a lender , it reveals safety margins, helping lenders assess risk levels.

This section offers a place to add supporting documents to the plan. It should contain a list of your business licenses and permits needed to operate the company. You can also include your management teams ‘ resumes and a copy of your lease agreement for the space you’ll rent. Include any other documents the lender might want to see, such as contractor or business arrangements.

Many businesses hire lawyers to create their business entities. Include these legal documents if you created a business entity. If you haven’t created one yet, you should consider which type to use. An LLC is a good option, as it provides tax benefits and liability protection. You can look for the best LLC loans if you choose this route.

How lenders score your business loan application

You submit a business plan to secure funding, but a lender must approve the plan before you receive the loan. Lenders determine how to respond to business loan requests by analyzing the business plans they receive. To do this, they look at five primary things.

Your character reveals intangible qualities about you and those who will work with and for you. Lenders look for integrity and honesty and try to answer the question, “Is this person trustworthy?”

Lenders analyze your personal credit history and assess your credit score to determine your creditworthiness. In addition, lenders evaluate your job experience, reputation and qualifications. They also look at your previous endeavors to determine the risk level associated with offering you a business loan.

Lenders spend a lot of time analyzing a borrower’s ability to repay the money they borrow, and they call this capacity. Are you capable of repaying the money if they approve the loan? To determine the answer, your lender will thoroughly review your projected revenue.

Additionally, lenders analyze the forecasted financial statements , including such financial information as cash flow statements . Lenders review the products and services you’ll offer to ensure there is demand and consider your funding request and your plans for using it.

Next , the lender looks closely at your capital. They want to see how much money you have invested in the business and compare it with the amount you’re requesting.

Your investment shows your level of commitment. A large investment into your business startup shows the lender you’re serious about making it work. It also tells them you’ve researched it, worked hard on planning it and expect to make a good profit from it. Therefore, make sure your business plan clearly indicates your investment amount.

In addition to your investment, the lender wants to know what you can offer as collateral. For example, you could offer the building you’ll operate out of as collateral if you own it or have equity in it. You could also use equipment, machines or vehicles. Being willing to offer assets as collateral improves your odds of getting the loan.

Finally, lenders will look at the following conditions:

• Demand for your service: Proving a high demand for your products is critical to get a loan approved.
• Competition: Your lender will evaluate the competition and look for things that distinguish your business from your competitors.
• Trends and marketing strategies: Will there be a demand for your products in the future? If so, does your plan outline how you’ll reach more people? Lenders look at your digital marketing strategies, as this is the newer trend. It also looks at your advertising strategies, including your website, SEO strategies and inbound marketing plans.

Summary of Money’s how to write a business plan for a loan

Learning how to write a business plan for a loan is essential. Your chances of getting approved for startup funding are significantly higher with a clear, thorough and well-researched business plan. Your plan should contain a comprehensive description for each section, allowing the lender to learn as much as possible about your business endeavor. After submitting it, the lender will use the 5 Cs to analyze your loan proposal. A well-written and researched business plan is imperative for any new business startup or newly formed company that needs to borrow some cash.

© Copyright 2024 Money Group, LLC . All Rights Reserved.

This article originally appeared on Money.com and may contain affiliate links for which Money receives compensation. Opinions expressed in this article are the author's alone, not those of a third-party entity, and have not been reviewed, approved, or otherwise endorsed. Offers may be subject to change without notice. For more information, read Money’s full disclaimer .

Car Dealership Business Plan: Complete Guide

• January 11, 2023

Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your car dealership, you will need to prepare a solid business plan.

In this article we go through, step-by-step, all the different sections you need in your car dealership business plan. Use this template to create a complete, clear and solid business plan that get you funded.

1. Executive Summary

The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.

If the information you provide here is not concise, informative, and scannable, potential lenders and investors may lose interest.

Though the executive summary is the first and the most important section, it should normally be the last section you write because it will have the summary of different sections included in the entire business plan below.

Why do you need a business plan for your car dealership?

The purpose of a business plan is to secure funding through one of the following channels:

• Obtain bank financing or secure a loan from other lenders (such as a SBA loan )
• Obtain private investments from investment funds, angel investors, etc.
• Obtain a public or a private grant

How to write an executive summary for your car dealership?

Provide a precise and high-level summary of every section that you have included in the business plan. The information and the data you include in this segment should grab the attention of potential investors and lenders immediately. Also make sure that the executive summary doesn’t exceed 2 pages.

The executive summary usually consists of the 5 main paragraphs:

• Business overview : introduce your car dealership: what is your business model (franchise vs. independent business ; new vs. used car dealership), how many cars will you have in inventory? Are you partnering with any car manufacturer(s)? Where would your store be located? Etc.
• Market overview : briefly analyze the car dealership industry in your area ( market size and growth), your competitors and target customers: average income of your target audience , demographic distribution, customer preferences etc.
• Management & people : introduce the management team and their industry experience. Mention your business partner(s), if any. Also give here an overview of the different teams, roles and their reporting lines
• Financial plan : how much profit and revenue do you expect in the next 5 years? When will you reach the break-even point and start making profits? Also include here a small chart with your key financials (revenue, net profit )
• Funding ask : what loan/investment/grant are you seeking? How much do you need? How long will this last? How will you spend the money?

Car Dealership Financial Model

Download an expert-built 5-year Excel financial model for your business plan

2. Business Overview

In the business overview section of your car dealership business plan, you should expand on what your company sells, to whom, and how it is structured. A few examples of questions you must answer here are:

• The history behind the project: why did you choose to open a car dealership today?
• Your business model : Are you franchising or is this an independent store? Are you selling new or used vehicles?
• Products & services : What vehicles / brands do you plan to sell? Are you planning to add any additional services (e.g. car repair & checkups, etc.)
• What is the legal structure of your company? Who are the directors / shareholders?

a) History of the Project

Briefly explain how did you come up with the plan to start a car dealership business. What motivated you to get into this business venture? 

Also try to demonstrate to investors your interest and passion for the car industry and car dealership in general.

For example, you might have worked in a car dealership and/or at a car manufacturer sales department in the past, and found immense growth potential for this type of business in your area.

b) Business Model

Explain in this section what business model you chose for your car dealership. Here are a few questions you must answer:

• Will you start an independent dealership, franchise model, chain store, etc.?
• Will you open a brand-specific dealership?
• Would your car dealership deal in new cars, used cars, or both?
• Do you plan to open an online dealership?
• Would you offer service and repairs in your car dealership?

c) Products & Services

Now that we have briefly introduced what your business model is, you must explain in detail what exactly you intend to sell. There are 2 things here:

• Products (cars): what vehicles and brands do you intend to sell? Why did you choose these vehicles / brands?
• Services : if you offer additional services (e.g. car repairs, checkups), explain what they are

In addition to the products and services , you should also include a list of prices for each. Of course, this doesn’t need to be exact. Car prices fluctuate based on various factors. Yet, you must be able to provide a range of prices for each category (e.g. sedan, luxury cars, vans, etc.).

If you specialize in a specific brand, you can provide a list of prices per model in appendix as well.

The prices are important as they will allow investors to tie your product offering with your financial projections later on.

d) Legal Structure

Explain the legal structure of your nursing home in this section. Are you starting a corporation, a limited liability company, or a partnership? Who are the investors? How much equity do they actually own? Is there a board of directors? Do they have prior industry experience?

3. Car Dealership Market Overview

A complete understanding of the car dealership industry is important for the success of your business.

Therefore, you must cover here 3 important areas:

• Status quo : how big is the car dealership industry in your area? How fast is the market growing? What are the trends fuelling this growth (or decline)?
• Competition overview : how many car dealership competitors are there? How do they compare vs. your business? How can you differentiate yourself from them?
• Customer analysis : what are your target customers? What are their customer preferences?

a) Status quo

When looking at the car dealership industry, try to start at the national level (US) and narrow it down to your service area (a city for example). You should answer 2 important questions here:

How big is the car dealership industry in your area?

How fast is the car dealership industry growing in your area, how big is the car dealership industry in the us.

The auto parts and car dealership industry in the US is huge: it was worth $1.18 trillion in 2021 as per the National Automobile Dealers Association . As per the same report, there were 16,676 light vehicles car dealerships in the US in 2021 which generate an average revenue of $71 million.

Sales are divided between new (52%) and used vehicles (37%) as well as services and parts (11%).

After the US, assess the size of the car wash industry in your city or area. Focus on the zone where you plan to offer your services.

Naturally, you might not be able to get the data for your specific city or region. Instead, you can estimate the size of your market, for more information on how to do it, read our article on how to estimate TAM, SAM and SOM for your startup .

Luckily, NADA publishes statistics per state so you can narrow it down easily. For your city instead, you will need to do work out some estimates. To give you an example, let’s assume you plan to operate in an area where there are already 30 car dealership businesses (in a 25 miles radius for example).

Assuming our business is based in Connecticut, we can use the state’s average annual turnover of $49,661 : we can reasonably assume that the car dealership industry is worth $1.5 million in your area . In other words, there are over 35,100 light vehicles (new and used) being sold in your area each year (assuming the average retail price of $43,000).

Now that we know your area’s market size, let’s look at growth instead.

Fortunately, you can use NADA’s number again as they publish annual reports. Just use your state’s market size growth, and explain the growth (or decline). This can be due to average car prices, or volume.

b) Competition overview

You should discuss both your direct and indirect competition in your business plan. Other car dealerships in the region will be your immediate competitors. Internet auctions, individual dealers, etc., will be your indirect competitors. 

In this section, you should also discuss the essential components of the business models of your main competitors. Your research should be focused on their clientele, the kinds of cars they offer, and their strengths and weaknesses .

A thorough competitive analysis is crucial as it may allow you to discover and address a customer need or preference that none of your rivals is addressing today.

Here are some of the questions that you must answer in this section:

• How many competitors are there in the area where you want to open your car dealership?
• Are they franchises or independent stores?
• Do they partner with specific car manufacturers?
• What type of cars do they offer (luxury, economy, used, new, etc.)?
• What is the average price range of the cars they sell?
• How many employees do they have?
• Do they offer services and repairs?
• Do your competitors offer buyback on the cars sold by them previously to the client?
• What type of offers and discounts do they offer to attract customers?
• How many cars / vehicles do they sell on average per month?

c) Customer analysis

Now that we have a good idea of the car dealership industry in your area as well as competition, now is time to focus on your target audience: customers.

Knowing your customer is extremely important before you get into any business. This is all the more relevant for car dealership where customer preferences and tastes are very different.

For example, if you are planning to get into a luxury car dealership business, you should look into:

• The estimated population of high-income people in your area
• Types of luxury cars that are in demand (hatchback, sedan, SUV, etc.)
• Shopping preference of your target customers (online or offline)
• How frequently do they buy (or exchange) new cars?
• Is their buying decision influenced by offers or discounts?
• What features do your target customers want in their new luxury cars?
• What type of additional services do they expect from their dealers?

4. Sales & Marketing Strategy

This is the section of your business plan where you outline your customer acquisition strategy. Try to answer the following questions:

• What are the different marketing strategies you will use?
• What are your Unique Selling Points (USPs)? In other words, how do you differentiate from your competitors?
• How do you intend to track the success of your marketing strategy ?
• What is your CAC or customer acquisition cost?
• What is your marketing budget?

What marketing channels do car dealerships use?

A few marketing channels that car dealership businesses typically use are:

• Signage, billboards
• PPC ads, Facebook ads, etc.
• Print media
• Loyalty programs
• Online local listing (Google Business)
• Content marketing (share content like vehicle maintenance tips, safe driving tips, etc.) on platforms like blogs, social media, etc.
• Word of mouth, recommendations

You must have a fair and nearly accurate estimate of your marketing budget. Therefore, make sure to budget for marketing accordingly in your financial projections.

What are your Unique Selling Propositions (USPs)?

In other words, how do you differentiate yourself vs. competitors? This is very important as you might need to win customers from competitors.

A few examples of USPs are:

• Products: you may be the exclusive distributor or a car make in your area for example
• Services : you may offer repairs and regular checkups for your customers
• Location : you store is closer to a busy road and/or to where your customers live

Your USPs will depend on your business model, competitor analysis, and target audience. Whatever your USPs are, it should appeal to your potential customers and attract them.

5. Management & People

You must address 2 things here:

• The management team and their experience/track record
• The organizational structure: the different team members and who reports to whom

Small businesses often fail because of managerial weaknesses. Thus, having a strong management team is vital. Highlight the experience and education of senior managers that you intend to hire to oversee your car dealership.

Describe their duties, responsibilities, and roles. Also, highlight their previous experience and explain how they succeeded in their previous roles.

Organization Structure

Even if you haven’t already hired a VP of sales, sales managers, support staff and any other relevant staff members, you must provide a chart of the organizational structure outlining the different teams, roles and their reporting lines.

6. Financial Plan

The financial plan is perhaps, with the executive summary, the most important section of any business plan.

Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your car dealership is an attractive investment.

There should be 3 sections to your financial plan section:

• Your historical financials (only if you already operate the business and have financial accounts to show)
• The startup costs of your project (if you plan to start a new car dealership, or purchase new inventory, expand your store, etc.)
• The 5-year financial projections

a) Historical Financials (if any)

In the scenario where you already have some historical financials (a few quarters or a few years), include them. A summary of your financial statements in the form of charts e.g. revenue, gross profit and net profit is enough, save the rest for the appendix.

If you don’t have any, don’t worry, most new businesses don’t have any historical financials and that’s ok. If so, jump to Startup Costs instead.

b) Startup Costs

Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project. For a car dealership, startup costs are all the expenses you incur before you open your shop and starting making sales. These expenses typically are:

• The lease deposit for the commercial space you rent (if you don’t buy it)
• The design and renovation of the existing facilities
• The inventory costs (the initial stock of vehicles you must buy to sell them at opening)

For example, let’s assume you want to buy 30 light vehicles as a start for inventory, and you take on a loan where you need to put down 15% upfront. Now, assuming these vehicles each cost $50,000 on average, this means you must put down $300,000 yourself. This comes in addition with any other startup cost mentioned above (lease deposit, renovation costs, etc.).

c) 5-Year Financial Projections

In addition to startup costs, you will now need to build a solid 5-year financial model as part of your business plan for your car dealership .

Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts in your business plan.

As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.

Your financial projections should answer at least the following questions:

• How much revenue do you expect to generate over the next 5 years?
• When do you expect to break even?
• How much cash will you burn until you get there?
• What’s the impact of a change in pricing (say 20%) on your margins?
• What is your average customer acquisition cost?

You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:

• The number of vehicles you sell over time ;
• Your expected revenue ;
• Operating costs to run the business ;
• Any other cash flow items (e.g. capex, debt repayment, etc.).

When projecting your revenue, make sure to sensitize pricing and the number of customers as a small change in these assumptions will have a big impact on your revenues.

7. Funding Ask

This is the last section of the business plan of your car dealership. Now that we have explained what type of vehicles your company sells to whom and at what price, but also what’s your marketing strategy, where you go and how you get there, this section must answer the following questions:

• How much funding do you need?
• What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
• How long will this funding last?
• Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)

If you raise debt:

• What percentage of the total funding the loan represents?
• What is the corresponding Debt Service Coverage Ratio ?

If you raise equity

• What percentage ownership are you selling as part of this funding round?
• What is the corresponding valuation of your business?

Use of Funds

Any business plan should include a clear use of funds section. This is where you explain how the money will be spent.

Will you spend most of the loan / investment to acquire the cost for the inventory (the vehicles)? Or will it cover mostly the cost of buying the land and building the store?

Those are very important questions you should be able to answer in the blink of an eye. Don’t worry, this should come straight from your financial projections. If you’ve built solid projections like in our car dealership financial model template , you won’t have any issues answering these questions.

For the use of funds, we recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.

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Business Auto Loan: A Complete Guide

Best Business Auto Loans

Camino financial.

• Loan amount: $5,100 to $25,000
• Terms: 24 months
• Payment frequency: Monthly
• Type of rate: Fixed
• Origination fee: 6.99%
• Requirements:  be active and registered for at least 12 months and generate sales of $30,000 annually or $2,500 monthly (among other conditions)

Wells Fargo

• Loan amount: $10,000 to $100,000
• Terms:  up to 84 months
• Fees: $150 documentation fee
• Requirements: Vehicle age limit of 10 years old (among other conditions)
• Loan amount: up to $250,000
• Terms: up to 84 months
• Requirements: Credit score of 680 and at least two years in business (among other conditions)

Bank Of America

• Loan amount: starting at $10,000
• Terms: four to six years
• Requirements:  qualified vehicle sellers with free-and-clear titles (among other conditions)

Crest Capital

• Loan amount: up to $1 million
• Terms: 2 to 6 years
• Fees: a first month's down payment and an administrative fee
• Requirements: Credit score of 650 and at least 2 years in business (among other conditions)
• Loan amount: $10,000 to $250,000
• Terms:  up to 6 years
• Requirements:  credit score of 670 and at least three years in business (among other conditions)

What Are Business Loans For Cars?

How small business auto loans work, benefits of getting an auto loan for business.

• Tax deductions. Business owners can reduce their tax liability by taking allowable business-related auto tax deductions .
• Business growth.  You can use vehicles for travel, selling/delivering your products and services, and numerous other uses.
• Lower Interest Rates. They typically offer lower interest rates than other types of loans because the lender is confident in their security - the vehicle - and the borrower's ability to make payments.

Who Should Get Business Auto Loans?

• Business Owners. Business owners can use pickup trucks, cars, vans, and other vehicles for different commercial purposes.
• Personal Drivers.  Caterers, florists, and bakeries can purchase a vehicle to make deliveries.
• Startup Transport Business.  With a truck or auto, you can transport people or goods.
• Trucking Companies.  With commercial truck loans, you could invest in a heavy truck to pull a flatbed or a refrigerated container to transfer food products.
• Owner-Operators.  Rather than stay an employee, you can purchase your own rig and become your own boss.
• Tow Truck Services.  Many tow truck owners get paid by insurance companies to provide this service, but they need the correct vehicles. A loan can give you the capital needed to buy them.
• Food Truck Companies.  A well-planned food truck is the mainstay of a mobile food business.
• Car Rental Companies.  To meet public demand, car rental businesses need small and larger vehicles with a variety of features to suit preferences.
• Moving Companies.  You may need several trucks to accommodate small or large moves and get more clients.
• Taxicab Companies.  You can start your own taxi company by buying a car or investing in a larger fleet to expand your operations.
• Limousine Operators.  You may want to purchase a newer stretch limo to accommodate weddings, parties, and other social event participants.

How To Apply For Business Vehicle Finance

• having a good credit score
• being able to make a down payment
• having the capacity to make regular payments
• proof of income (bank statements)
• proof of insurance
• valid ID, like a driver's license
• other financial documents

How Much Can You Afford? Use Our Commercial Loan Calculator

Most common business auto financing investments, improve your current company car, purchase a company car, buy a fleet of vehicles, refinance an existing vehicle, lease a business car, buy a commercial truck, business auto loan financing vs. business auto lease.

• When you purchase a vehicle and make payments, it's yours until you sell or trade it.
• With a lease, you still make payments, but you don't own the car.

Camino Financial Is Your Best Bet

Our business loan requirements.

• Be registered and in operation for at least 12 months
• Businesses earning $2,500 in average monthly revenue (or $30,000 per year)
• Located in the U.S., except for New Jersey, Hawaii, and Puerto Rico
• If you don't have an SSN, you can apply with your ITIN

How To Apply With Camino Financial

Fill out and submit the application, wait to hear from us, accept the final loan terms, receive the loan proceeds, related articles.

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Small Businesses Seek Funding Despite Tough Lending Market

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Small businesses continue to face challenges beyond their control. In the past year alone, they’ve weathered increasing prices, high interest rates and stricter credit standards. Despite these obstacles, many entrepreneurs are moving forward with plans to get much-needed financing.

In fact, 67% of U.S. small-business owners plan to pursue funding for their business within the next 12 months, according to a new NerdWallet survey conducted online by The Harris Poll among 335 small-business owners.

Accessing financing during an ever-changing economic climate, however, can be difficult and expensive. While a loan can help fund the purchase of new equipment, stock shelves, hire employees and otherwise help a business survive or even thrive, it can also become a burden if payments become overwhelming.

Here are three tips to help small-business owners find and get the most affordable capital right now.

1. Leverage your existing financial relationships

Nearly half (45%) of small-business owners plan to pursue a traditional term loan in the next 12 months — and 18% are specifically looking for a bank loan, according to the survey.

Bank business loans tend to offer long repayment terms and low interest rates, but can be difficult to qualify for — especially since lenders have tightened their credit standards over the past year. Getting a bank loan isn’t impossible, however.

Some banks, especially local or community institutions, may be more flexible with their qualification requirements or offer other benefits, like interest rate discounts, if you already have a relationship. Consider starting your bank loan search with the institution that administers your business bank account or one that has issued you a loan in the past.

2. Strengthen your application profile

With or without an existing financial relationship, applying for a small-business loan can be intimidating: 17% of small-business owners are concerned about being rejected for the funding they need for their business in the next 12 months, according to the survey. To improve your chances of approval, you can:

Build your credit score

A strong credit score shows lenders that you repay your debts. In general, the stronger your credit history, the better loan rates and terms you’ll receive. To build your credit score , you can look for errors on your credit reports and dispute them with the appropriate credit bureau, make debt payments more frequently and pay down or pay off existing debt.

Offer collateral

Traditional lenders, like banks and credit unions, may require you to secure your loan with collateral . Offering additional collateral (e.g., equipment, inventory, real estate) — or providing it when it isn’t required — can help bolster your loan application, as it offsets the risk a lender faces when working with your business.

Double-check your paperwork

When you complete a loan application, it’s important to verify all requirements and read each question carefully. Providing incorrect or outdated information can significantly slow down the application process — and sometimes result in an automatic rejection.

If you’re applying for a loan online, for instance, and the lender uses automated underwriting technology, inputting inaccurate data can trigger a rejection regardless of the strength of your credentials. Before submitting your application, it can also be helpful to ask an employee, partner or business advisor to review it.

3. Seek expert advice

Although banks remain the most common source of credit for small businesses, there are many other funding options entrepreneurs can consider, including online loans, small-business grants , and equity financing. Twenty-one percent of small-business owners, however, say understanding all of the financing options available to them is a concern for their business in the next 12 months, according to the survey.

To help guide your funding search, it can be useful to work with a free or low-cost business advisor through an organization like SCORE or your local small-business development center. Experts from these organizations can help you organize your finances, compare funding options, and even prepare and submit loan applications.

Some lenders, like community financial development institutions (CDFIs) and nonprofit organizations, offer similar advisory services, in addition to their own loan options.

This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet February 13-15, 2024, and February 20-22, 2024, among 335 U.S. adults ages 18 and older who own a small business. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 6.4 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact [email protected] .

NerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results.

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