business plan for car loan

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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Home » Blog » Business Loans » How To Write A Business Plan For A Loan

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How To Write A Business Plan For A Loan

A solid business plan is often critical to securing funding for your small business. Learn how to create a business plan for a loan that includes the information lenders want to see.

WRITTEN & RESEARCHED BY

Lead Staff Writer

A business plan is a crucial business document you need to have on hand when applying for business loans. However, the mere thought of writing a business plan for a loan is intimidating to a lot of business owners.

A one-page business plan may be sufficient for certain types of small business loans (for example, online loans), but bank loans and SBA loans typically require a more in-depth business plan that delves further into your financials.

If you need to write a business plan for a loan, you’ve come to the right place. Keep reading to learn more about everything you need to include in your business plan to improve your chances for loan approval.

Table of Contents

What Is A Business Plan For A Loan?

10 key sections to include in your business plan, what do lenders look for in a business plan, business plan examples, resources for writing a business plan for a loan, final thoughts on writing a business plan for a loan, faqs about how to create a business plan for a loan.

A business plan is a written document that provides a complete overview of your business, including information about your business’s services, strategies, finances, and goals. All businesses should have a business plan, but a business plan is especially important when applying for a business loan .

Most business plans should include some version of the following sections. Depending on your industry and other factors, such as whether you own a startup or established business, some sections could be condensed or combined. The exact verbiage for section titles can vary, as well.

For a business plan that’s longer than one page, it’s a good idea to preface these sections with a cover page and table of contents.

Executive Summary

This section is a condensed version of your entire business plan. It will likely include:

• Details of when, how, and why you started your business
• Your company mission statements
• High-level financial information about your business
• An explanation of how funding will help your business

Depending on whether you’re a startup or an established business, you may use this section to focus on your growth strategy or your past successes.

Company Description

Use this section to delve deeper into your company’s offerings, core principles, legal structure, and leadership. Your company description should also include your unique value proposition . Describe your company’s unique strengths that will ensure your success.

Products & Services

This section should detail the products and/or services your company provides. Make clear the problem that your offerings solve. Include information such as:

• Information on your raw materials and production process (if applicable)
• Profit margins
• Whether you have or plan to file patents or copyrights

Market Analysis

Use this section to demonstrate your understanding of your overall industry and the specific markets you serve, including market trends, competitors, and the demographics of your target customers. Some companies hire a consultant or agency to perform the research for the market analysis section.

Marketing & Sales Plan

Building off your market analysis, how will you market to your target customers and beat your competitors? How will you sell to them and distribute your product? What are your sales goals and projections? Provide these details in this section.

Organization & Management

Use this section to include your organizational and leadership structure, ideally including an organizational flowchart. Also include job descriptions, qualifications, and years of experience to demonstrate why your team is capable of delivering on your company goals and is worthy of investment.

Operational Strategy

This section is used to describe your day-to-day operational processes, including information about your location, facility, equipment, inventory, and daily production. If you have a service-based business, this section may focus more on your team’s daily activities and how they contribute to long-term goals.

Financial Outlook

This section should tell lenders how much you spend and how much you make in profits. Include up to five years of data if possible, including financial documents such as:

• Income statements
• Cash flow statements
• Balance sheets
• Capital expenditure budgets
• Sales forecasts
• Projected income statements
• Information on any collateral you have to secure the loan

Depending on how much financial documentation you have, you might refer to specific documents in this section and indicate that the full documents can be found in the Appendix section.

Though startups may not have all of this data, you can make projections based on monthly or quarterly data and industry averages.

Funding Request

Now that you’ve laid out your expenses and financial projections, it’s time to make your case for a loan. Be clear about how much money you need, how you will spend it, and how you will repay the loan. Be as detailed as possible.

In the Appendix, include any supporting documents, such as financial documents referred to in the Financial Outlook section. Some other types of documents you might include in this section are:

• Business licenses  or permits
• Credit reports
• Product photos
• Marketing materials
• Letter of intent to purchase business

If you know what lenders are looking for in a business plan for a loan, you will increase your chances of approval. Learn the five things lenders want to see in your business plan, followed by five tips to create a loan-worthy business plan.

The 5 Cs Of Credit

The Five Cs of Credit is a phrase that summarizes what lenders look for when deciding whether to extend a loan to a business. Lenders will, accordingly, look for the five Cs when reviewing the business plan in your loan application. The five Cs are:

• Character: Your knowledge, experience, and creditworthiness
• Capacity: Your ability to repay the loan
• Capital: How much you have already invested in your business
• Conditions: Your market viability, considering your industry as well as overall economic conditions
• Collateral: Assets you can use to secure the loan

5 Business Plan Tips For Loan Approval

Besides emphasizing your “5 Cs,” there are a few other things you can do to make the best impression with your business plan to increase your chances of securing funding.

• Avoid Industry Jargon: Use plain English rather than industry terminology that the lender might not be familiar with. Remember that the loan underwriter may not have deep knowledge of your specific industry.
• Show Cash Flow: Cash flow is one of the most important factors that determine loan eligibility. You can even get a loan with bad credit as long as your cash flow is sufficiently high. The more insight you can provide into your past, current, and future cash flow, the better.
• Show Your Investment: Before extending a loan, the lender will want to see that you have already invested some of your own resources, such as personal savings, into your business. Be sure to include documentation that demonstrates your investment.
• Enlist Help: You will likely need some professional assistance in creating your business plan, whether that means hiring a writer, an industry consultant, or both. At the very least, you should have a third party review your business plan before you submit it as part of a loan application.
• Revise Your Plan As Needed: If this is the first time you’ve taken a close look at your business strategy and financials, you will surely learn some things about your business while creating your plan. For example, you may realize you cannot afford a business loan as large as you planned to ask for. Rather than trying to justify the number you started with, it’s better to modify your funding request (and other aspects of your plan) to align with your financial reality.

It’s easy to find templates and examples of business plans online. Though you may not want to copy and paste from a template verbatim, these samples provide a starting point and show you different ways a business plan can be structured. Here are a few to start with:

• Business plan template for a startup (from SCORE)
• Business plan template for traditional businesses  (from the SBA)
• Business plan template for retail or eCommerce (from Shopify; requires email address)

These tools and resources can help you create a solid business plan for a loan. While some free business plan creation tools are available online, you will have to pay for some options.

SBA Business Plan Resources (Free)

The SBA has a great resource in its online learning center that includes business plan worksheets . In addition to business plan templates, the SBA also helps you connect to free local business counselors who may be able to help you with your business plan.

Business Plan Software ($)

If you need extra help creating a business plan and don’t mind spending a little bit of money, consider business plan creation software. For example, LivePlan ($20/month) is business plan software that connects with QuickBooks to import your financial data to your plan.

Business Plan Writer/Consultant ($$$)

If you’re willing to invest more heavily into your business plan, consider hiring a writer or consultant that specializes in creating business plans. This option costs anywhere from $2,000 to $20,000, with the lower end of that scale typically including only basic writing services and the higher end representing a specialized industry consultant agency.

While it’s helpful to know how to write a business plan for a loan, you can always hire someone to help you draft the plan if the task is too daunting. A business plan is a worthwhile investment no matter what type of business you have or whether you are currently trying to secure business funding. Even if you don’t need a loan right now, it’s important to maintain an updated business plan to serve as a guide for your own business decisions.

Was your loan denied because of your business plan (or another reason)? Learn what to do if your business loan was denied .

Do you need a business plan to get a loan?

No, you do not always need a business plan to get a loan. Most traditional business lenders, including banks and SBA lenders, do require a business plan. However, a lot of online business lenders (such as OnDeck ) do not ask for a business plan.

How do you write a business plan for a bank loan?

To write a business plan for a bank loan, you first need to lay the groundwork by analyzing your business’s finances, strategies, and market conditions. Alternatively, you can hire someone to do this research for you. Once you have all this information, you can use a guide, template, or software to help you organize it into a business plan.

How do you write a business plan for an SBA loan?

To get an SBA loan, you will usually need a comprehensive business plan, including a detailed plan for how you intend to use the funds. On the SBA website, you can find general information about what to include in a business plan, or you can download a free business plan template. Some online SBA loan services, such as SmartBiz , do not require a business plan.

How long should a business plan be?

There is no set length for a business plan. A typical business plan used to secure financing might be 20-40 pages. A so-called “lean business plan” that serves as an internal company document for a small business may only be one or two pages.

Who writes business plans?

Business plans are often written by the business owners themselves, but you can also hire a freelance writer or consultant to write a business plan. A business plan writer will still need the business owner’s input (and access to the business’s financial documents or accounting software ) in order to prepare the plan.

• Latest Posts

Shannon Vissers

@shannonvissers.

Latest posts by Shannon Vissers ( see all )

• Next-Day Funding Merchant Services - November 20, 2023
• 8 Best Merchant Account Providers For Small Business In 2024 - July 20, 2023
• How To Write A Business Plan For A Loan - July 12, 2023
• How To Check SBA Loan Status - April 25, 2023
• Using Lightspeed Loyalty For Retail Success - January 18, 2023

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Auto Loan Business Plan

$59.00 $39.00 3 reviews

Auto Loan Bundle

• Description
• Executive Summary
• Products & Services
• Market Analysis
• Marketing Plan
• Management Plan
• Financial Plan

I. Executive Summary

Company description.

AutoLoanBoost is a financial consulting and credit-building service based in Miami, Florida, that specializes in assisting individuals with securing favorable auto loans. Established with the goal of becoming the leading provider of comprehensive financial solutions in the Miami metropolitan area, AutoLoanBoost offers a unique combination of proprietary assessment tools, personalized guidance, and educational resources to empower its clients and help them achieve their financial objectives.

At the core of AutoLoanBoost's offerings is a tailored credit-building program that leverages the latest industry best practices and regulatory changes to help clients improve their credit profiles and secure better loan terms. The company's online resource hub further supports clients with educational materials, interactive tools, and personalized advice, ensuring they have the knowledge and resources needed to make informed financial decisions. By establishing strategic partnerships with local credit unions and automobile dealerships, AutoLoanBoost aims to capture a significant market share in the Miami area and expand its operations to other major cities in Florida within the next five years.

The primary problem that AutoLoanBoost aims to address is the significant challenge faced by many prospective car buyers in securing affordable auto loans . Poor credit scores and lack of financial literacy often lead to higher interest rates and unfavorable loan terms, making it increasingly difficult for individuals to finance their vehicle purchases. This problem has far-reaching consequences, not only hampering their ability to afford reliable transportation but also adversely impacting their overall financial well-being.

Existing solutions tend to focus on general financial planning or credit repair, without addressing the specific challenges faced by individuals seeking to finance their vehicle purchases. AutoLoanBoost's specialized, client-centric approach fills this gap in the market, providing tailored financial consulting and credit-building services to help prospective car buyers secure more favorable auto loan terms.

At AutoLoanBoost, we offer a comprehensive suite of financial consulting and credit-building services to empower individuals with low to moderate credit scores to secure more favorable auto loan terms. Our personalized financial assessment and debt management strategies help clients improve their credit profile, while our strategic partnerships with local credit unions provide access to competitive financing options. Through our online resource hub and continuous service enhancements , we are committed to delivering the most effective solutions to meet our clients' auto loan needs.

Mission Statement

AutoLoanBoost is dedicated to empowering Miami residents with comprehensive financial consulting and credit-building services that facilitate access to affordable auto loans. By leveraging our proprietary assessment tools and industry expertise, we strive to transform the auto financing experience and foster financial well-being within our community.

Key Success Factors

The key success factors that will drive the growth and profitability of AutoLoanBoost include:

• Proprietary financial assessment tool to accurately evaluate clients' credit profiles and formulate tailored financial plans.
• Comprehensive online resource hub with educational materials, interactive tools, and personalized guidance for credit improvement.
• Strategic partnerships with local credit unions and major automobile dealerships to expand market reach and client base.
• Experienced team of financial consultants with expertise in credit analysis, debt management, and financial education.
• Effective marketing and sales strategies to drive client acquisition and achieve annual growth targets.

Financial Summary

The financial projections for AutoLoanBoost demonstrate strong growth potential and a path to profitability. The company aims to establish itself as a leading provider of comprehensive financial consulting and credit-building services in the Miami metropolitan area.

AutoLoanBoost requires $500,000 in seed funding to support its initial launch and operations. The anticipated return on investment (ROI) is expected to reach 35% by the end of the third year, demonstrating the company's strong financial outlook and potential for long-term growth and sustainability .

Funding Requirements

To launch and grow AutoLoanBoost, the startup requires $500,000 in seed funding to support its product development, marketing, operations, and staffing needs.

II. Products & Services

Problem worth solving.

The primary problem that AutoLoanBoost aims to address is the significant challenge faced by many prospective car buyers in securing affordable auto loans. Poor credit scores and lack of financial literacy often lead to higher interest rates and unfavorable loan terms, making it increasingly difficult for individuals to finance their vehicle purchases. This problem has far-reaching consequences, not only hampering their ability to afford reliable transportation but also adversely impacting their overall financial well-being .

Individuals with low to moderate credit scores often struggle to qualify for auto loans, forcing them to resort to subprime lenders that charge exorbitant interest rates. This, in turn, leads to higher monthly payments, longer loan terms, and significant financial strain over the life of the loan. The inability to secure favorable financing can also limit their access to newer, more reliable vehicles, leading to higher maintenance and operating costs , further exacerbating their financial challenges.

Additionally, many first-time car buyers and recent graduates lack the necessary financial knowledge and guidance to navigate the complex auto loan landscape. They may not be aware of the factors that influence their credit scores, the importance of budgeting for associated vehicle ownership costs, or the strategies to improve their creditworthiness . This knowledge gap often results in them making suboptimal financial decisions, ultimately leading to long-term financial consequences.

The problem is further compounded by the limited availability of comprehensive financial consulting and credit-building services tailored to the unique needs of auto loan applicants. Existing solutions tend to focus on general financial planning or credit repair, without addressing the specific challenges faced by individuals seeking to finance their vehicle purchases . This gap in the market creates a significant opportunity for AutoLoanBoost to provide a specialized, client-centric approach to address this pressing issue.

Our Solution

At AutoLoanBoost, we have developed a comprehensive suite of financial consulting and credit-building services to empower individuals with low to moderate credit scores to secure more favorable auto loan terms. Our innovative approach combines personalized guidance, debt management strategies, and strategic partnerships with local credit unions to help our clients achieve financial stability and access affordable vehicle financing.

Personalized Financial Consulting

The cornerstone of our service is our proprietary financial assessment tool , which accurately evaluates a client's credit profile and formulates a tailored plan to address their specific financial needs. Our team of certified financial consultants works closely with each client to:

• Analyze their current credit score, debt, and spending patterns
• Develop a personalized debt management strategy to improve their credit score
• Provide guidance on budgeting, savings, and responsible credit utilization
• Educate clients on the factors influencing their credit and how to maintain a healthy financial profile

Online Resource Hub

To further support our clients, we have created a comprehensive online resource hub that provides a wealth of educational materials, interactive tools, and personalized guidance for credit improvement. This hub serves as a one-stop-shop for individuals seeking to enhance their financial literacy and take control of their credit-building journey.

Partnering with Local Credit Unions

By leveraging our strategic partnerships with local credit unions and community banks, we are able to secure more favorable loan terms for our clients. Our financial consultants work closely with these partners to ensure that our clients have access to competitive interest rates, flexible repayment options, and a streamlined loan application process.

Continuous Improvement

To maintain our position as the leading provider of auto loan consulting and credit-building services, we are committed to continuously enhancing our offerings . We closely monitor industry trends, regulatory changes, and customer feedback to adapt our services, incorporate the latest best practices, and ensure that our clients consistently receive the most effective and up-to-date solutions.

Unique Selling Proposition

AutoLoanBoost stands out in the auto loan consulting market by offering a comprehensive, end-to-end solution that empowers individuals to improve their credit profiles and secure more favorable loan terms. Unlike traditional lenders or credit counseling services that focus solely on loan facilitation or credit education, AutoLoanBoost provides a unique blend of personalized financial consulting, credit-building programs, and strategic partnerships with local credit unions to ensure our clients achieve long-term financial stability.

• Personalized Financial Consulting: Our team of certified financial consultants provides in-depth analysis of clients' credit profiles and tailors financial plans to help them improve their credit scores and secure better auto loan terms.
• Proprietary Credit-Building Tools: AutoLoanBoost has developed a suite of proprietary financial assessment and planning tools that leverage the latest industry data and insights to create customized credit-building strategies for our clients.
• Strategic Partnerships: By collaborating with local credit unions and automobile dealerships, we can offer our clients access to a wider range of financing options and more favorable loan terms.
• Comprehensive Approach: Unlike competitors that focus solely on either loan facilitation or credit education, AutoLoanBoost provides a holistic solution that addresses both credit improvement and affordable auto financing.
• Continuous Innovation: We consistently enhance our credit-building programs and educational resources to incorporate the latest industry best practices and regulatory changes, ensuring our clients receive the most up-to-date and effective guidance.

Development Stage and Future Plans

AutoLoanBoost has undergone an extensive development process, driven by the goal of providing a comprehensive and tailored solution for individuals seeking favorable auto loan terms. The initial phase focused on creating a proprietary financial assessment tool that accurately evaluates clients' credit profiles and formulates personalized financial plans. This tool has been continuously refined based on customer feedback and market insights, ensuring it remains at the forefront of industry best practices.

In parallel, the team has developed a robust online resource hub that offers educational materials, interactive tools, and personalized guidance for credit improvement. This hub has been instrumental in empowering clients to take an active role in enhancing their financial standing and securing better loan conditions.

The credit-building program has been meticulously designed to incorporate the latest industry regulations and best practices, enabling AutoLoanBoost to deliver highly effective and compliant services. Ongoing monitoring of market trends and consumer behavior has allowed the company to adapt its offerings to meet the evolving needs of its target clientele.

III. Market Analysis

The auto loan industry plays a crucial role in facilitating the purchase of vehicles, which is a significant financial decision for many consumers. As the demand for personal transportation remains strong, the auto loan industry has evolved to cater to the diverse needs of car buyers, including those with varying credit profiles.

• Industry Size: The auto loan market in the United States is estimated to be valued at over $1.2 trillion as of 2022, with a significant portion of this market focused on the Miami metropolitan area.
• Growth Rate: The auto loan industry has experienced steady growth, with an average annual growth rate of 5-7% over the past five years. This growth is driven by factors such as increased consumer confidence, the expansion of the middle-class population, and a shift towards more affordable financing options.
• Market Dynamics: The auto loan industry is characterized by several key trends and challenges. Increasing demand for alternative financing options , such as leasing and subprime loans, has emerged as a significant market driver. Additionally, regulatory changes aimed at consumer protection and responsible lending practices have transformed the industry, requiring lenders to adapt their practices accordingly.
• Key Players: The auto loan industry is dominated by major financial institutions, including banks, credit unions, and specialized auto finance companies. Some of the leading players in the industry include Wells Fargo, Bank of America, Ally Financial, and Santander Consumer USA.
• Regulatory Environment: The auto loan industry is subject to a range of regulations, including the Truth in Lending Act, the Equal Credit Opportunity Act, and the Fair Credit Reporting Act. These regulations aim to protect consumers from predatory lending practices and ensure transparency in the lending process.
• Customer Segments: The primary customer segments within the auto loan industry include individuals with varying credit profiles, first-time car buyers, and those seeking to refinance their existing auto loans. These segments have diverse financial needs and require tailored solutions to secure favorable loan terms.

The auto loan industry is poised for continued growth, driven by the strong demand for personal transportation and the increasing need for affordable financing options. As the industry evolves, businesses like AutoLoanBoost that can provide personalized financial consulting and credit-building services will be well-positioned to capture a significant share of the market and contribute to the financial well-being of their clients.

Target Market

The primary target market for AutoLoanBoost comprises individuals in the Miami metropolitan area who are seeking assistance in securing favorable auto loan terms. This segment includes those with low to moderate credit scores, first-time car buyers, and recent graduates who lack the financial knowledge and resources to navigate the auto loan process effectively.

• Demographic Profile: The target market for AutoLoanBoost spans a wide range of ages, from young adults in their early 20s to middle-aged individuals in their 50s. The income level of this segment varies, with a focus on those from low to moderate-income households, typically earning between $35,000 to $75,000 annually. The educational background of the target market is diverse, ranging from high school graduates to individuals with college degrees.
• Geographic Location: AutoLoanBoost's primary focus is on the Miami metropolitan area, which includes Miami-Dade, Broward, and Palm Beach counties. This region is characterized by a diverse population and a high demand for affordable transportation options.
• Psychographics: The target market for AutoLoanBoost is composed of individuals who are concerned about their financial well-being and are seeking solutions to improve their credit profiles and secure better auto loan terms. They value financial education, personalized guidance, and partnerships with trustworthy financial institutions.
• Behavioral Factors: The target market for AutoLoanBoost is typically open to exploring new financial services and technologies that can help them achieve their goals. They are likely to be receptive to recommendations from friends, family, and community organizations, and they may be influenced by online reviews and social media.
• Market Size: According to the latest census data, the Miami metropolitan area has a population of approximately 6.2 million individuals, with a significant portion of the population falling within the target age and income ranges for AutoLoanBoost's services. The company aims to capture at least 20% of the auto loan consulting and credit-building services market in the region within the first three years of operation.
• Challenges and Pain Points: The primary challenges faced by AutoLoanBoost's target market include poor credit scores, lack of financial literacy, and difficulty securing affordable auto loans. These individuals often struggle with high-interest rates, unfavorable loan terms, and limited access to personalized financial guidance, which can lead to financial instability and long-term debt.

In summary, AutoLoanBoost's target market comprises a significant portion of the Miami metropolitan area's population, with a focus on individuals who need assistance in improving their credit profiles and securing better auto loan terms. By addressing the unique challenges and pain points of this segment, AutoLoanBoost aims to position itself as the leading provider of comprehensive financial consulting and credit-building services in the region.

Market Trends

AutoLoanBoost operates in a rapidly evolving auto loan market, where the needs of consumers are constantly shifting in response to various demographic, technological, and economic factors. By closely monitoring these market trends, the company aims to ensure its services remain highly relevant and effectively address the growing demands of its target audience.

By closely monitoring these evolving market trends, AutoLoanBoost is uniquely positioned to address the growing needs of its target audience. The company's comprehensive approach, which combines personalized financial consulting, credit-building programs, and strategic partnerships with local lenders, empowers individuals to overcome their financial challenges and secure affordable auto loans that align with their long-term financial goals.

Key Customers

The target customer segment for AutoLoanBoost's services are individuals with low to moderate credit scores, first-time car buyers, and recent graduates who require assistance in securing favorable auto loan terms. These customers often struggle with poor credit profiles, lack of financial literacy, and limited access to affordable financing options, making them the ideal beneficiaries of AutoLoanBoost's comprehensive approach.

The ideal customer archetype for AutoLoanBoost is a young, tech-savvy individual, aged 25-35, who is actively seeking to improve their financial standing and build their credit history. This customer is typically employed in a professional or entry-level managerial role, with a steady income but limited experience in navigating the intricacies of the auto loan market. They are highly engaged on social media and serve as influential voices within their personal and professional networks, making them valuable advocates for the business.

These customers are motivated by a desire to achieve financial stability and independence, and they are drawn to AutoLoanBoost's ability to provide personalized financial guidance, tailored debt management plans, and partnerships with local credit unions. They value innovation, efficiency, and sustainability, and they are likely to appreciate AutoLoanBoost's commitment to using technology-driven solutions and maintaining a client-centric, eco-friendly business model.

By addressing the key pain points of this target customer segment, such as the lack of time, the need for convenient solutions, and the struggle to improve their credit scores, AutoLoanBoost is positioned to become a trusted partner in their journey towards financial empowerment. As satisfied customers experience the benefits of the company's services, they are expected to become vocal advocates, sharing their positive experiences within their networks and further expanding AutoLoanBoost's reach and brand recognition.

Competition Analysis

To effectively position AutoLoanBoost in the market, it is crucial to analyze the key competitors and their offerings. The following is a comprehensive assessment of the major players in the auto loan consulting and credit-building services industry in the Miami metropolitan area:

• Strengths: Established presence in the Miami market, strong partnerships with local credit unions, and a well-developed online platform for credit education and assessment.
• Weaknesses: Limited personalized consulting services, less focus on tailored financial plans, and higher pricing structure compared to local competitors.
• Market Share: Estimated at 15% of the auto loan consulting and credit-building services market in the Miami metropolitan area.
• Product/Service Offerings: Credit assessment, educational resources, and loan facilitation through partner credit unions.
• Pricing Strategy: Higher consultation fees and commission-based pricing on loan facilitation.
• Market Positioning: Positioned as a comprehensive credit-building solution, targeting individuals with moderate to high credit scores.
• Strengths: Focused on serving the local community, strong relationships with automobile dealerships, and a reputation for personalized attention.
• Weaknesses: Limited online presence and resources, smaller team of financial consultants, and less extensive partnerships with credit unions.
• Market Share: Estimated at 12% of the auto loan consulting and credit-building services market in the Miami metropolitan area.
• Product/Service Offerings: In-person credit counseling, debt management plans, and loan facilitation through select credit unions and dealerships.
• Pricing Strategy: Competitive consultation fees and performance-based pricing for credit improvement services.
• Market Positioning: Positioned as a community-focused, personalized credit-building solution for individuals with low to moderate credit scores.
• Strengths: Extensive network of partnerships with credit unions and dealerships across Florida, strong online presence, and a well-established brand.
• Weaknesses: Less personalized approach, standardized financial assessment tools, and a one-size-fits-all service model.
• Market Share: Estimated at 18% of the auto loan consulting and credit-building services market in the Miami metropolitan area.
• Product/Service Offerings: Online credit assessment, loan facilitation, and educational resources.
• Pricing Strategy: Tiered pricing structure based on the complexity of credit-building services.
• Market Positioning: Positioned as a convenient, technology-driven solution for individuals seeking to improve their credit scores and secure auto loans.

The competitive analysis reveals opportunities for AutoLoanBoost to differentiate itself in the market by offering a more personalized, comprehensive, and community-focused approach to credit-building and auto loan facilitation. By leveraging its proprietary financial assessment tools, strategic partnerships, and a client-centric culture, AutoLoanBoost can position itself as the leading provider of personalized financial consulting and credit-building services in the Miami metropolitan area.

SWOT Analysis

The SWOT analysis for AutoLoanBoost provides valuable insights into the company's competitive position and the factors that may influence its success in the auto loan consulting and credit-building market.

The key strengths of AutoLoanBoost lie in its proprietary financial assessment tool, comprehensive online resource hub, and partnerships with local credit unions and automobile dealerships. These assets enable the company to provide personalized and effective credit-building services to its target market. However, the company's limited brand recognition and potential scalability challenges may pose weaknesses that need to be addressed.

The significant market demand for financial consulting and credit-building services in the Miami metropolitan area presents a substantial opportunity for AutoLoanBoost. By leveraging technology and strategic partnerships, the company can enhance its client reach and service delivery. Additionally, the ability to continuously adapt to market trends and consumer behavior can help the company stay competitive.

Nonetheless, the business faces threats from established financial institutions and credit repair agencies, as well as potential regulatory changes and economic uncertainties that could impact client demand. Mitigating the risk of client churn through effective credit-building strategies will also be crucial for the company's long-term success.

IV. Marketing Strategy

Marketing goals.

The overarching marketing objectives for AutoLoanBoost are to establish the business as the leading provider of comprehensive financial consulting and credit-building services for auto loan applicants in the Miami metropolitan area, while also driving profitability and laying the groundwork for future expansion.

• Capture at least 20% market share of the auto loan consulting and credit-building services in the Miami metropolitan area within the first three years of operation.
• Establish strategic partnerships with a minimum of five local credit unions and three major automobile dealerships within the first year of operation to facilitate favorable loan terms for clients.
• Develop a strong online presence with an optimized website, active social media platforms, and targeted digital advertising campaigns to attract and engage potential clients.
• Implement a referral program that incentivizes satisfied clients to recommend AutoLoanBoost to their network , contributing to a minimum of 30% annual growth in client acquisition .
• Participate in local community events, workshops, and seminars to increase brand awareness and attract potential clients seeking financial consulting and credit-building services.

Market Strategy

AutoLoanBoost's market strategy is designed to establish the company as the leading provider of comprehensive financial consulting and credit-building services for auto loan applicants in the Miami metropolitan area. By leveraging a multi-pronged approach, the company aims to capture a significant market share and achieve profitability within the first three years of operation.

Target Market Segmentation

• Demographic: Individuals with low to moderate credit scores, first-time car buyers, and recent graduates who need assistance in securing favorable auto loan terms.
• Geographic: The Miami metropolitan area, with plans to expand to other major cities in Florida within the first five years.
• Psychographic: Individuals who value financial stability, seek to improve their credit scores, and are interested in enhancing their overall financial literacy and well-being.

Market Penetration Strategies

• Establish strategic partnerships with local credit unions and major automobile dealerships to facilitate loan facilitation and credit-building services.
• Develop a robust online presence through an optimized website, social media platforms, and targeted digital advertising campaigns to attract and engage potential clients.
• Implement a referral program that incentivizes satisfied clients to recommend AutoLoanBoost to their network, leveraging word-of-mouth marketing.
• Participate in local community events, workshops, and seminars to increase brand awareness and position the company as a trusted financial advisor.

Market Share Objectives

• Establish strategic partnerships with a minimum of five local credit unions and three major automobile dealerships within the first year to expand the company's reach and service offerings.
• Continuously monitor market trends and consumer behavior to adapt services and offerings accordingly, ensuring the company remains competitive and responsive to the evolving needs of the target market.

Market Growth Strategies

• Expand operations to other major cities in Florida within the first five years, leveraging the proven success and expertise gained in the Miami market.
• Continuously invest in research and development to enhance the company's proprietary financial assessment tools, educational resources, and credit-building programs, ensuring they remain at the forefront of industry best practices.
• Explore opportunities for strategic acquisitions or partnerships with complementary financial services providers to further strengthen the company's market position and expand its service offerings.

Pricing Strategy

AutoLoanBoost's pricing strategy is designed to strike a balance between affordability for clients and ensuring the long-term sustainability and growth of the business. The overarching pricing philosophy is to offer transparent, value-based pricing that aligns with the company's mission of empowering individuals to improve their financial well-being and secure favorable auto loan terms.

The pricing model employed by AutoLoanBoost is a combination of one-time consultation fees and performance-based commissions from partnering lenders. The initial consultation fee is set at a competitive rate of $99, which covers the comprehensive financial assessment, credit analysis, and tailored action plan development. This fee structure ensures that clients have a vested interest in the success of the credit-building program, while also providing AutoLoanBoost with a stable revenue stream to support its operations.

In terms of pricing analysis , AutoLoanBoost has conducted a thorough market study to benchmark its pricing against competitors in the auto loan consulting and credit-building services industry. The company's pricing is designed to be slightly lower than the industry average, with the goal of attracting a larger customer base while still maintaining profitability. This pricing strategy, coupled with the company's unique value proposition and comprehensive service offering, positions AutoLoanBoost as an attractive and cost-effective solution for individuals seeking to improve their credit and secure better auto loan terms.

To further enhance the value proposition and drive customer acquisition, AutoLoanBoost will offer discounts and promotional pricing for specific customer segments and partnership initiatives. For example, the company will provide a 10% discount for clients who are referred by existing customers, as well as a 20% discount for active military personnel and veterans. Additionally, AutoLoanBoost will work closely with its partner credit unions to offer special loan packages and promotional rates to clients who successfully complete the credit-building program.

By implementing a well-researched and strategic pricing approach, AutoLoanBoost aims to create a sustainable business model that delivers exceptional value to its clients while also achieving its financial and growth objectives.

Advertising Strategy

AutoLoanBoost's advertising strategy aims to establish the brand as the leading provider of comprehensive financial consulting and credit-building services for auto loan applicants in the Miami metropolitan area. The multi-faceted approach combines targeted digital marketing initiatives, traditional advertising methods, and strategic public relations efforts to effectively reach and engage the target audience.

Digital Marketing Strategies

• Social Media Campaigns: Develop a strong social media presence on platforms like Facebook, Instagram, and LinkedIn, featuring informative content, interactive tools, and client success stories to build brand awareness and foster engagement.
• Email Marketing: Implement a robust email marketing campaign to nurture leads, provide financial education, and promote the company's services. Segment the mailing list based on user behavior and preferences for personalized messaging.
• Search Engine Optimization (SEO): Optimize the AutoLoanBoost website and content for improved search engine visibility , ensuring prospective clients can easily find and access the company's services when searching for credit-building or auto loan assistance.
• Pay-per-Click (PPC) Advertising: Leverage targeted PPC campaigns on search engines and social media platforms to drive qualified traffic to the website and generate new leads.

Traditional Advertising Methods

• Print Advertisements: Place strategic advertisements in local newspapers, magazines, and industry publications to reach a wider audience and establish the company's credibility.
• Outdoor Advertising: Explore opportunities for billboards, bus shelters, or transit advertisements to increase brand awareness and visibility within the Miami metropolitan area.
• Radio Commercials: Create and air informative radio spots on local stations to educate the target audience about the company's services and their benefits.

Public Relations Strategies

• Press Releases: Distribute periodic press releases to local media outlets, highlighting the company's achievements, new service offerings, or industry insights to garner positive media coverage.
• Community Engagement: Participate in local community events, workshops, and financial literacy seminars to connect with the target audience, build brand reputation, and position AutoLoanBoost as a trusted financial advisor.
• Referral Program: Implement a referral program that incentivizes satisfied clients to recommend the company's services to their network, leveraging word-of-mouth marketing to drive new business.

To ensure the effective execution of the advertising strategy, AutoLoanBoost will closely monitor the performance of each marketing initiative and continuously optimize the campaigns based on data-driven insights. Regular reviews and adjustments will be made to maximize the return on investment and achieve the company's growth objectives.

Advertising Implementation Timeline

Sales and Distribution

At AutoLoanBoost, we have designed a multi-pronged sales and distribution strategy to effectively reach and serve our target market of individuals with low to moderate credit scores, first-time car buyers, and recent graduates. By leveraging both online and offline channels, we aim to provide a seamless and accessible experience for our clients throughout their credit-building and auto loan acquisition journey.

Online Sales Channels

• Comprehensive Website : Our user-friendly website will be the primary hub for clients to access our financial assessment tools, educational resources, and schedule personalized consultations with our certified financial advisors.
• Digital Marketing Campaigns : We will implement targeted digital advertising campaigns, including search engine optimization (SEO), social media marketing, and email marketing, to attract and engage potential clients in the Miami metropolitan area.
• Online Scheduling and Booking : Clients will be able to conveniently schedule and book their financial consultation appointments through our website, ensuring a smooth and efficient sales process.

Offline Sales Channels

• Local Community Outreach : We will actively participate in local community events, workshops, and seminars to raise brand awareness, build trust, and attract potential clients who may benefit from our services.
• Partnerships with Credit Unions and Dealerships : By establishing strategic partnerships with local credit unions and automobile dealerships, we will leverage their existing customer base and distribution channels to reach a wider audience and facilitate the auto loan process for our clients.
• Referral Program : We will implement a robust referral program that incentivizes satisfied clients to recommend AutoLoanBoost to their network, further expanding our reach and client acquisition.

Through this multi-faceted sales and distribution strategy, we aim to capture at least 20% market share of the auto loan consulting and credit-building services in the Miami metropolitan area within the first three years . By leveraging both online and offline channels, we will ensure that our target market can easily access and engage with our comprehensive financial services, ultimately empowering them to improve their credit scores and secure favorable auto loan terms.

V. Management and Organization

Organizational structure.

AutoLoanBoost's organizational structure is designed to foster a collaborative, client-centric environment that supports the company's strategic goals. The leadership team has adopted a decentralized approach, empowering cross-functional teams to work together effectively and ensuring efficient information flow across the organization.

The CEO provides overall strategic direction and oversees the execution of the company's goals. The CFO and CMO report directly to the CEO, responsible for financial planning, budgeting, and marketing strategy, respectively. The Director of Operations is responsible for managing the day-to-day operations, including the Client Services department, where the Senior Financial Consultants and Financial Consultants deliver personalized financial consulting and credit-building services to clients.

The organizational structure emphasizes cross-functional collaboration, with the Marketing and Client Services teams working closely to develop targeted outreach campaigns and enhance the client experience. The decentralized approach allows for increased flexibility, efficient decision-making, and rapid response to market changes, aligning with AutoLoanBoost's goal of being a nimble and adaptable startup in the auto loan consulting industry.

Management Team

The management team of AutoLoanBoost combines extensive expertise in financial consulting, credit analysis, and customer relationship management. Led by seasoned professionals with a proven track record of success, the team is well-equipped to guide the company's strategic vision and ensure its operational excellence.

Emma Gonzalez , the Founder and Chief Executive Officer, has over a decade of experience in the financial services industry, with a strong focus on credit management and lending. As a Certified Financial Planner (CFP) and Certified Credit Counselor , she has extensive expertise in developing and implementing successful credit-building programs. Emma's deep understanding of the challenges faced by individuals with poor credit scores, coupled with her passion for financial education, has been instrumental in shaping the vision and mission of AutoLoanBoost.

Michael Hernandez , the Chief Operating Officer, brings 8+ years of experience in operations and project management, with a strong focus on financial technology. As a Lean Six Sigma Black Belt , he is skilled in process optimization and data-driven decision making, ensuring that AutoLoanBoost's operations are streamlined and efficient. Michael's expertise in leveraging technology to enhance the customer experience will be crucial in delivering seamless and scalable financial consulting services.

Sophia Ramirez , the Chief Financial Officer, has over 12 years of experience in financial analysis and strategic planning. As a Certified Public Accountant (CPA) and holder of an MBA , Sophia is adept at identifying and mitigating financial risks, as well as developing robust financial models and reporting systems. Her deep understanding of financial best practices and regulatory compliance will be instrumental in ensuring the long-term financial sustainability of AutoLoanBoost.

Juan Perez , the Director of Partnerships and Business Development, brings 6+ years of experience in sales and relationship management, with a strong network in the automotive and financial services industries. As a Certified Financial Services Marketer , he is skilled at building strategic partnerships and driving revenue growth. Juan's expertise in fostering collaborative relationships with local credit unions, automobile dealerships, and other key stakeholders will be crucial in expanding AutoLoanBoost's reach and delivering comprehensive financial solutions to its target market.

Staffing and Human Resources Plan

AutoLoanBoost's staffing and human resources plan is designed to support the company's aggressive growth targets and ensure the delivery of exceptional financial consulting services. The initial team will comprise key personnel with diverse expertise, and the plan outlines a strategic expansion of roles and responsibilities to align with the business's scaling operations.

To ensure the successful execution of AutoLoanBoost's strategic objectives, we have established a set of SMART (Specific, Measurable, Achievable, Relevant, and Time-Bound) milestones that will guide the management and organization of the business. These milestones are designed to track progress, maintain accountability, and facilitate the ongoing optimization of our operations and service delivery.

Key Metrics

To effectively track the performance and progress of the AutoLoanBoost business, we have identified the following key performance indicators (KPIs) that will be closely monitored and analyzed:

VI. Financial Plan

Revenue model.

AutoLoanBoost's revenue model is designed to generate sustainable income through a multi-pronged approach, leveraging its core competencies in financial consulting and credit-building services. The company's revenue streams include one-time consultation fees, commission from partnering lenders, and performance-based fees for significant credit score improvements.

• One-time Consultation Fees: AutoLoanBoost charges a one-time consultation fee for its personalized financial assessment and credit-building services. This fee covers the initial consultation, the development of a customized financial plan, and ongoing support throughout the client's credit improvement journey.
• Commission from Partnering Lenders: AutoLoanBoost has established strategic partnerships with local credit unions and banks to facilitate auto loans for its clients. The company earns a commission for each loan it facilitates, providing a recurring revenue stream that scales with the number of clients served.
• Performance-based Fees: In addition to the one-time consultation fee, AutoLoanBoost offers a performance-based fee structure for clients who achieve significant credit score improvements through the company's credit-building program. This incentivizes the team to prioritize client success and fosters long-term relationships with satisfied customers.

Sales Forecast

The sales forecast for AutoLoanBoost reflects the company's strategic objectives to establish a strong presence in the Miami metropolitan area, achieve profitability, and expand operations to other major cities in Florida. The sales projections are based on the company's market analysis, competitive landscape, and the anticipated growth of the auto loan consulting and credit-building services industry.

Establishing and operating AutoLoanBoost will require significant investment in both startup and ongoing operational expenses. The business plan has been carefully crafted to ensure a lean and efficient cost structure, with a focus on maximizing profitability through scalable operations and strategic partnerships.

Break-even Analysis

The break-even point is a crucial metric in understanding when a business will start generating profits. It represents the level of sales or revenue at which the total costs of operating the business are exactly covered, and the business begins to generate a positive net income. Analyzing the break-even point helps entrepreneurs make informed decisions about pricing, cost structure, and resource allocation, ensuring the long-term viability and profitability of the venture.

Based on the financial projections, AutoLoanBoost's break-even point is 1,000 units or $500,000 in revenue . This means that the business needs to generate a minimum of $500,000 in annual revenue to cover its total fixed costs of $350,000 and variable costs of $200 per unit. Once the business exceeds the break-even point, it will begin to generate a positive net income. This analysis underscores the importance of pricing the services appropriately, managing costs effectively, and achieving the targeted sales volume to ensure the long-term profitability and sustainability of AutoLoanBoost.

Financial Statements - Income Statement

The financial projections for AutoLoanBoost demonstrate a clear path to profitability over the next three years. The company's focus on providing personalized financial consulting and credit-building services is expected to generate steadily increasing revenue, with a targeted gross margin of over 35%. By effectively managing expenses and leveraging strategic partnerships, AutoLoanBoost aims to achieve profitability within the first two years of operation and continue expanding its operations in the Miami metropolitan area and beyond.

Financial Statements - Cash Flow

The cash flow statement is a crucial financial document that provides a detailed analysis of the movement of cash in and out of a business. It helps to assess the company's ability to generate and utilize cash, which is essential for long-term sustainability and growth. The following projected cash flow statement for AutoLoanBoost outlines the expected cash flows for the years 2024, 2025, and 2026.

Financial Statements - Balance Sheet

The balance sheet is a fundamental financial statement that provides a snapshot of a company's financial position at a specific point in time. It outlines the company's assets , liabilities , and equity , which are the three main components of a balance sheet. This information is crucial for understanding the financial health and stability of a business.

To achieve the ambitious goals outlined in the business plan, AutoLoanBoost requires a significant investment in the form of seed funding. The startup is seeking $500,000 in initial funding to support its product development, marketing, operations, and staffing needs during the critical launch and growth phases.

Exit Strategy

AutoLoanBoost's exit strategy aims to provide our investors and founders with a clear path to realize their returns while ensuring the continued success and growth of the business.

• Acquisition - We will explore potential acquisition opportunities with larger financial services or credit-focused companies that could leverage AutoLoanBoost's unique value proposition and client base to expand their market reach.
• Sale of Business - If an attractive acquisition offer is not forthcoming, we will consider selling the business to a strategic buyer or private equity firm that can provide the necessary resources and expertise to scale the company.
• Ownership Transfer - In the long term, we may consider transitioning ownership to a key employee or family member who has been instrumental in the company's success and can ensure the continued growth and development of AutoLoanBoost.
• Repayment Schedule - Any external funding, such as convertible notes or equity investments, will have a clearly defined repayment schedule based on the company's financial performance and projected growth. This will provide investors with a predictable timeline for their return on investment.
• Equity Stake - Equity investors will maintain a significant ownership stake in the company, with the option to convert their shares into cash or reinvest in the business during an acquisition or sale event.

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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.

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Guide to Business Car Loans

What Is a Business Auto Loan?

How do business auto loans work, business auto loan amounts, term length, repayment structure, commercial truck loans, 6 steps to getting a commercial auto loan, 1. figure out your budget, 2. review your credit, 3. find the right vehicle,  4. compare offers, 5. apply with a lender, commercial auto loans with bad credit, commercial auto loans without a personal guarantee, business auto loan borrower requirements, business auto loans vs personal auto loans vs equipment financing.

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Lenders That Offer Small Business Loans

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Home > Finance > Loans

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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What Is a Business Auto Loan?

Main features of a business auto loan, how to apply for a business auto loan, tips for improving your chances of getting approved, best business auto loan providers, alternatives to a business auto loan, the bottom line, what is a business auto loan how to finance company vehicles.

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A business auto loan is a type of secured loan that companies or individual owners can use to purchase vehicles for business purposes. A business auto loan can be less expensive than an unsecured loan, and its interest costs may be tax-deductible. Business auto loans are also referred to as commercial auto loans.

Key Takeaways

• Business auto loans are available for financing company vehicles.
• Like consumer auto loans, they are secured, with the vehicle serving as collateral.
• When shopping for a business auto loan, compare interest rates, loan lengths, down payment options, and eligibility requirements. 
• If a business auto loan isn't right for you, you have some other alternatives.

These are some of the key features to consider when shopping for a business auto loan.

Interest Rates

The interest rates for business auto loans can be fixed or variable and will vary from lender to lender. The rate you'll qualify for will depend on factors such as the loan amount and the credit history of the business.

Loan terms, or lengths, for business auto loans can span several years. For example, you may be able to find a loan for a 24-month term or one stretching out as long as 84 months. The longer the loan term, the lower your monthly payments could be, but the more you'll end up paying overall.

Eligibility Requirements

Qualifying for a business auto loan is much like qualifying for a consumer auto loan, but with some additional requirements. Those often include:

• The vehicle needs to be for business purposes. 
• Your business must have been in existence for a certain period of time.
• The business must also meet the lender's income and credit requirements.

You will most likely have to provide documentation such as tax returns, relevant business licenses, and profit and loss statements .

Down Payment Options

Some lenders may require that you put down a certain percentage of the vehicle's selling price. Or, you may be able to borrow the entire price, with no down payment needed. The more you put down, the less you'll need to borrow, which could save you in total interest charges and may also entitle you to a lower annual percentage rate (APR) . 

Applying for a business auto loan is a relatively straightforward process.

1. Establish Your Needs and Budget

Assess your needs for a new vehicle and look at your budget to determine how much you can afford without overextending your business financially. Consider any taxes and fees you may need to pay for the car and any other costs to maintain it. Our car loan payment calculator can help you determine your likely monthly payments and compare different loans.

2. Research Lenders 

Comparing multiple lenders lets you see what your options are and find the best fit. Auto loans are widely available from banks, credit unions, online lenders, and car dealers, and you can often check their minimum requirements online. The U.S. Small Business Administration (SBA) also backs certain business-related loans in partnership with local lenders. With some lenders, you may be able to get pre-approved to see what rates you would likely qualify for.

3. Choose a Vehicle

Before applying for a loan, choose what type of vehicle your business will need and how much it will cost. Some types of vehicles, such as trucks, are often financed through equipment loans , which can vary in their terms from auto loans. Bear in mind that vehicle prices are often negotiable, and you may have more leverage if you're buying multiple vehicles rather than just one.

4. Gather Documentation

To speed the process along as much as possible, make sure you have all the necessary documents in hand. The lender will outline what's needed—in most cases you'll have to provide proof that your business actually exists, such as tax returns, profit and loss statements, bank statements, and possibly a business plan .

5. Submit Your Application

Work with the lender to complete your application. Make sure you answer every question and provide any additional documentation. 

6. Sign the Loan Documents

If your loan application is approved, you will need to sign loan documents before you receive funding. These documents should cover the loan's repayment terms and your and the lender's respective responsibilities. Once they're been signed, the lender will give you the loan proceeds and you can purchase the vehicle.  

Lenders want to know that you'll be able to repay any money they lend you. You'll increase your odds of loan approval if you can demonstrate that your business is well managed and responsible in its use of credit. When buying a car (or any expensive piece of equipment) it helps to have a clear rationale for why you need it and how it will help the business.

If your business has a business or commercial credit score or a credit rating , make sure you know it, because the lender will most likely check. Anything you can do to improve your score or rating will also help, although that can take time.

You may also benefit from seeking guidance, either from someone in your finance department (if you have one) or from an outside loan specialist. 

Here are three of the best lenders, with information about their loan options and requirements.

Bank of America

Bank of America offers loans as low as $10,000 with APRs starting at 6.99%. Applicants can use the loan to purchase cars, light trucks, and vans. Borrowers don't need to be an existing Bank of America customer, but those who are enrolled in the Preferred Rewards for Business program may qualify for interest rate discounts.

Balboa Capital

Balboa Capital may be a good choice for newer businesses looking for commercial truck financing. Applicants only need to be in business for a minimum of one year. Other requirements include a minimum credit score of 620 and at least $100,000 in annual revenue. There is an online application and the approval process can take as little as an hour if you submit it during business hours.  

Ally Financial

Ally Financial offers several loan and leasing options. Applicants can opt for traditional financing for commercial vehicles, a closed-end lease with a fixed repayment term, or an open-end lease with flexible terms. Most types of vehicles qualify. Ally doesn't disclose its loan terms and borrower requirements, so you'll need to contact the lender directly.

A business auto loan may not be your only option. Others include:

• SBA loans. The U.S. Small Business Administration offers loans —the SBA 7(a) loan in particular—that can be used for most purposes, including acquiring vehicles and equipment. Businesses need to be for-profit and meet certain credit and size criteria, among other requirements.
• Personal loans. Though it can be possible to use a personal loan to finance a vehicle, not all lenders will allow you to use the loan for business purposes. This funding option may also be risky since you could be personally responsible for payments if the business is unable to keep up with them.
• Consumer auto loan. Taking out a consumer loan can be possible if you intend to use the vehicle for both business and personal purposes. Depending on the car's use, you may be able to have your business pay for certain expenses.

How Long Does It Take to Get Approved for a Business Auto Loan?

Lenders vary in how long it takes them to approve a business auto loan. In many cases it may be several days to several weeks, depending on the amount you want to borrow and how much documentation the lender requires.

Can Startups Qualify for Business Auto Loans?

Startups can qualify for business auto loans, although there may be fewer lenders willing to fund them due to the greater perceived risk. Lenders often indicate how long a company needs to have been in business on their websites.

What Happens If I Default on a Business Auto Loan?

If you default on your business auto loan, the lender may repossess the vehicle in an attempt to recoup its losses. Your business credit score or rating could also be negatively affected.

Can I Use a Business Auto Loan to Purchase Used Vehicles?

Yes, it is possible to purchase a used vehicle using a business auto loan, just as it is with a regular consumer auto loan. Qualifying criteria will depend on the lender.

If your company needs a new vehicle, or a whole fleet of them, a business auto loan could be the answer. As with any other kind of loan, it pays to take the time to shop around for one with a good interest rate and other terms.

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Advertised as low as APRs (annual percentage rates) are effective as of June 4 th , 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. The following example(s) reflect representative credit terms made available to applicants and are for informational purposes only. They may not reflect the loan amount, term, APR and estimated payment for your loan. Example: A 5-year, fixed-rate new car loan for $62,000 would have 60 monthly payments of $1,222 each, at an annual percentage rate (APR) of 6.79%.

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How To Get A Business Loan In 5 Steps

Updated: Nov 2, 2023, 4:05pm

A business loan can provide the funds you need to expand operations, cover day-to-day expenses and purchase equipment or inventory. If you’ve never applied for a business loan, you might be unsure about where to begin or which documents are required.

Here’s a simple guide that walks you through the process of evaluating your options and preparing your business loan application in five easy steps.

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1. Decide Why You Need Financing

There’s more than one kind of small business loan. Deciding why you need financing will help you choose the right kind of loan. Here are a few common scenarios:

• Buy new equipment Some lenders offer equipment loans . This type of loan is designed to help you purchase business equipment, like machinery or office furniture. The loan is secured by the equipment, so the lender can seize it if you fail to repay the loan.
• Borrow a small amount of money . If you need to borrow a small amount of money, consider applying for a microloan. The U.S. Small Business Administration (SBA) has a Microloan program that allows qualified applicants to borrow up to $50,000. In addition, there are not-for-profit organizations that offer microloans, such as Kiva and the Women’s Microfinance Initiative.
• Establish a business . Since most lenders have minimum time in business requirements, it can be tough to find one that will issue you a startup loan for a new business . If you’re just starting out, you may have to apply for a microloan or a business credit card . You may find it easier to qualify for a business credit card than other types of business loans since approval is based on your personal credit score.
• Pay for day-to-day operations . A working capital loan —a short-term loan used to cover daily expenses, like rent and payroll—can help you cover temporary cash flow problems.
• Borrow money on an as-needed basis . If you don’t know the exact amount you need to borrow, a business line of credit could be a good option. Once a lender issues you a line of credit, you can withdraw funds up to a certain amount to cover business expenses and only pay interest on the amount you borrow.

Funding Turnaround Time

As you consider different types of financing for your business, consider how quickly you need to receive your funding. Each loan option will have different turnaround times once you submit an application, and if you need your funding quickly, some options may be better than others.

Many loans, including loans from banks and credit unions, can take 30 or more days to be funded. Yet, this can vary based on the lender and your application, including if any asset backing the loan needs to be assessed.

If you need a quick turnaround time for funding, some SBA loans can be funded within 10 days, and there are online lenders that offer fast business loans . These loans, which include both traditional loans and equipment loans, can be funded within a day in some cases.

2. Check Your Eligibility

Although business loan requirements vary, here are four things lenders are likely to consider when reviewing your small business loan application:

• Credit score . When you apply for a business loan, a lender will review your personal and business credit scores . They help the lender assess the likelihood you’ll repay your loan. In general, the higher your credit score, the greater your chances of loan approval and receiving a low interest rate.
• Collateral and/or personal guarantee . Some lenders require you to pledge collateral —something of value, such as equipment or inventory—it can seize if you default on the loan. Some lenders may also require a personal guarantee, meaning you have to secure the loan with personal assets, such as your savings, home or other valuable possessions.
• Time in business . A traditional bank typically requires a business to have been in operation for at least two years, while an online lender usually requires only one year. If you’ve been operating your business for less than one year, don’t get discouraged. Some online lenders will approve qualified applicants who have only been in business for six months.
• Annual revenue . Your total annual sales are also a relevant factor. Before applying, ask a lender what the requirements are and review your business finances to see if you meet them.

3. Compare Business Lending Options

There are several places you can find small business loans . Here are three of the most common types of lenders.

Online Lenders

Online lenders offer a variety of loan products to small business owners, including term loans, merchant cash advances, lines of credit and microloans. Loan approval rates were lower for online lenders than traditional banks as of 2022—71% versus 82%, respectively—according to the 2023 Small Business Credit Survey (SBCS) by the Federal Reserve.

Nonetheless, online lenders often have less stringent requirements than traditional banks. As a result, you may find it easier to get approved for a business loan with an online lender if you have less-than-stellar credit. In addition, online lenders often have much faster turnover—some may issue funds as soon as the same business day.

A major downside of taking out a business loan with an online lender, however, is that it often charges higher interest rates than a traditional bank.

Related:  Average Business Loan Rates: What Will You Be Charged?

Traditional Banks

Traditional banks provide many of the same types of business loans as online lenders. The main advantage of applying for a small business loan with a bank versus an online lender or microlender is that it typically offers lower rates for well-qualified applicants.

One disadvantage of applying for a business loan with a bank is that it often has more stringent eligibility requirements. If you have a bad personal credit score (a FICO score less than 580), you will likely have a hard time qualifying without a co-signer—someone who agrees to repay the loan if you fail to meet your payment obligations.

If you opt for funding from a bank, a small bank may be a better option versus a larger one. A majority of borrowers were satisfied with their experience and few were frustrated by long wait times, according to the 2023 SBCS survey. Fewer borrowers who worked with large banks were satisfied with their experience and more were frustrated by long waits for funding.

Microlenders

Microlenders are typically not-for-profit organizations that issue microloans up to $50,000 to qualified applicants, often designed to provide financing for business owners who don’t qualify for traditional business loans. Microlenders usually have less stringent eligibility requirements.

For example, the microlender Kiva does not have a minimum credit score requirement. Instead, it approves applicants based on “social capital.” To qualify, you have to get a certain number of people to lend money to you through Kiva’s platform before your loan request becomes public on their website.

Comparing Offers

As you shop for loans from various lenders, use a business loan calculator to calculate the costs of each loan. This can help you find the lowest cost financing option.

4. Gather the Required Documents

Once you understand your lending options, gather the required documents. A lender will likely ask for these items:

• Personal and business tax returns
• Business licenses
• Articles of incorporation
• Personal and business bank statements
• Profit and loss statements
• Financial statements
• Business plan
• Building lease

If you’re unsure what documents are needed, contact the lender before applying.

5. Submit Your Application

The final step is to submit your small business loan application. Depending on what lender you’ve decided to work with, you can do this online or in person.

Here’s some information a lender might ask for:

• Business name
• Social Security number (SSN)
• Desired loan amount
• Loan purpose
• Business Tax ID
• Annual revenue

Once you submit your application, you’ll have to wait for an approval decision. If your loan is approved, a lender will send you a loan agreement to sign before issuing your funds or a line of credit you can draw from.

How To Choose the Best Business Loan

Choosing the best business loan comes down to comparing loans you qualify for and determining which loan is the right fit. Here are loan factors to weigh across many loans.

• Annual percentage rate (APR). A loan’s APR represents what a loan costs on an annualized basis, including interest and fees. Comparing APRs can give you an apples-to-apples idea of which business loans will be the most and least affordable.
• Fees. Lenders may charge upfront fees to process your loan application. Projecting these fees and factoring them into the equation can also help you compare costs.
• Repayment terms. Terms for business loans can range from one year to 25 years. Choosing a long loan term can decrease your monthly payments but increases how much interest you’ll pay over time. The right loan term for you depends on your goals and what installment payments you can afford.
• Funding speed. While business loans from major banks might provide competitive rates for borrowers with strong credit, the application process can be cumbersome. If funding speed is a high priority, online lenders may offer faster funding.

How To Get a Business Loan from Banks

The process for taking out a business loan from a bank can vary by financial institution. Some major banks have online applications where you input information about yourself and your business to apply. In other cases, you’ll have to visit a branch to apply.

Information you must provide to start an application could include your business name, the date you started the business, gross annual revenue and annual household income for all owners. Brick-and-mortar banks tend to have more stringent eligibility requirements compared to online lenders; having strong credit and financials may be necessary to qualify.

Types of Business Loans

Depending on your business’s needs, one loan type may work better than another. Before accepting any financing, consider various business loans so that your business is best served by the loan.

• SBA loans. SBA loans are small business loans guaranteed by the Small Business Administration. These loans include SBA 7(a) loans, 504 loans, CAPlines, Microloans and others, each of which serve different purposes. SBA loans often come with lower interest rates and down payments than other options, but you’ll often need to be an established business to qualify.
• Term loans. Term loans are traditional installment loans that are repaid over predetermined terms. Banks, credit unions and online lenders all offer these loans and while some have limited uses, many can be used for most business-related expenses. They’re typically available up to $500,000 with APRs starting around 9%.
• Lines of credit. A business line of credit is a form of financing that your business can draw from on an as-needed basis, making it a good option for ongoing cash flow issues. The borrower has access to the line of credit for a set period of time up to a predetermined limit. Once that draw period is over, the borrower has to repay the loan, with interest. APRs are typically anywhere between 10% and 99%.
• Invoice factoring and financing. With invoice factoring , your business sells outstanding invoices to a factoring company at a discount. This can be an effective way to get paid for outstanding invoices quickly, rather than waiting for customers to pay. APRs for invoice factoring are typically between 10% and 79%.
• Merchant cash advance. A merchant cash advance works by giving a lender a portion of your future sales, making this a good option for businesses that have a high volume of sales and need cash quickly. A lender will lend your business money and then that money will be repaid with a percentage of your sales on a daily or weekly basis.
• Equipment financing. Equipment financing funds the purchase of equipment or machinery, with the purchased equipment backing the loan. These loans can be used for anything from office furniture to manufacturing equipment, and terms can be as long as 25 years with limits of up to $1 million.

Frequently Asked Questions (FAQs)

What credit score is needed for a business loan.

Since lenders have different eligibility requirements, the personal credit score you need to qualify for a business loan varies. That said, minimum credit score requirements may range from 500 to 680.

The business credit score needed to qualify also varies from lender to lender. Plus, it depends on the type of loan you’re applying for and what business credit score a lender uses. For example, when it comes to SBA loans, you’ll typically need a minimum business credit score of 155 to pass the SBA’s pre-screen process. However, most lenders set their minimum score requirements between 160 and 165.

How can I get a business loan with no money?

Although most lenders have annual revenue requirements, it’s possible to get a business loan if your business doesn’t have any money. Some lenders offer no doc business loans—loans that don’t require verification of business income. To qualify, you’ll likely need to have excellent credit and provide a personal guarantee.

Can I get a business loan with bad credit?

Although you’ll likely find it tougher to get approved for a small business loan with bad credit, it’s possible. Some lenders specialize in offering business loans to borrowers who have bad personal credit scores . However, If approved, a lender will most likely charge you a higher interest rate.

To receive a lower interest rate and boost your approval odds, consider applying with a co-signer who has a good credit score (at least 670, according to FICO) and decent income, if possible. A co-signer is someone who agrees to repay your loan if you default. Before you ask someone to co-sign for you, make sure they understand that a missed payment can cause damage to their credit.

How can I get approved for a business loan without collateral?

Certain lenders may be willing to approve you for a business loan without collateral if you sign a personal guarantee. Providing a personal guarantee means that you legally agree to be personally responsible for paying back the loan with your own assets or savings if the business cannot. 

Since eligibility conditions vary by lender, shopping around can help you find a loan with application criteria that fits your situation. You may have the best shot at qualifying for a no-collateral loan through an online lender that has flexible application requirements.

Looking for a business loan?

Get Forbes Advisor’s ratings of the best lending platforms and helpful information on how to find the best loan based on your credit score.

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Jerry Brown is a personal finance writer based in Baton Rouge, La. He's been writing about personal finance for three years. Financial products he enjoys covering include credit cards, personal loans, and mortgages.

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Best auto loan rates of june 2024, getting pre-approved for an auto loan before heading to the dealership can help save you money..

A car is an expensive purchase, but choosing the right lender can save you thousands of dollars in interest charges and fees. Plus, you want your car shopping experience to be easy and transparent so that you're confident about the terms you're getting.

CNBC Select evaluated dozens of auto loan lenders based on their rates and terms, selection of loan options, car-buying experience and other factors. Below are our picks for the best auto loan providers, whether you're shopping for a new vehicle or looking to refinance your existing car loan. (Read more about our methodology below.)

Best auto loans

• Best from a big bank: Capital One Auto Finance
• Best from a credit union: PenFed Auto Loans
• Best for rate shopping: myAutoloan
• Best for online car shopping: Carvana
• Best for used vehicles: CarMax Auto Finance
• Best for refinancing: Autopay

Compare offers to find the best auto loan

Best from a big bank, capital one auto finance, annual percentage rate (apr).

Depends on credit profile

Loan purpose

New vehicles, used vehicles, refinancing

Loan amounts

Starting at $4,000

36 to 72 months

Credit needed

Not specified

Early payoff penalty

Depends on the lender

Terms apply.

• Open to borrowers with bad credit
• No early payoff fees
• Prequalification available
• Convenient online tools allowing to search for vehicles and check estimated loan terms
• Only available at participating dealers
• You must apply at the dealer to get the final loan terms

Who's this for? When it comes to auto financing, traditional banks can offer competitive rates, especially to existing clients. If securing the most favorable loan terms from a big bank is your goal, you might want to consider Capital One Auto Finance .

Standout benefits: Capital One makes the car buying process convenient. Using the bank's online Auto Navigator tool, you can browse used and new cars from participating dealerships. Prequalification is also available, allowing you to check estimated terms with a soft credit check. Once you prequalify, you'll see monthly payments and rates as you browse car offers.

[ Jump to more details ]

Best from a credit union

Penfed auto loans.

Starting at 5.24%

Starting at $500

36 to 84 months

20% of the overdue amount, up to $25

• Loan amounts start at $500
• Cash incentives through car-buying service
• Co-borrowers allowed
• Credit union membership required
• Late payments subject to fees

Who's this for? PenFed can be an excellent choice whether you're shopping for a new or used car or want to refinance your auto loan. The credit union offers affordable rates, flexible loan amounts and term lengths and charges no prepayment penalty. Additionally, you can prequalify for a new or used car loan and see estimated terms without a hard credit check .

Standout benefits: While you can secure financing through PenFed for a car loan at the dealer of your choice, you'll find the most appealing deals using the credit union's car buying service, powered by TrueCar . Benefits include members-only cash-back incentives and special loan rate discounts.

Best for rate shopping

Starting at 5.01%

New vehicles, used vehicles, refinancing, private party and lease buyout

Starting at $8,000 (or $5,000 for refinancing)

24 to 72 months

FICO score of 575 or greater

Varies by lender

• Open to borrowers with bad credit (minimum 575 score)
• Provides multiple offers
• Fully online application available
• Co-borrowers and co-signers allowed
• Not available in all states
• Limited customer service

Who's this for? MyAutoloan can be a great option if you want to shop around for car loan rates without filling out applications at multiple lenders.

Standout benefits: MyAutoloan will match you with up to four pre-approved loan offers from different lenders after you fill out a quick form. Pre-approval will not hurt your credit — you'll only get a hard inquiry if you choose to apply with one of the lenders you've been matched with.

Best for online car shopping

Carvana auto loan.

Starting at 6.85%

Used vehicles

$5 after a grace period of 16 days

• 100% online application process available
• Allows co-signers
• Financing is only available for cars sold through Carvana

Who's this for? Carvana can be a good solution if you want as simple of a car buying process as possible. While many lenders offer an online application, there are usually extra steps you need to take to finish the car buying process, such as visiting the dealership or getting in touch with the lender to finalize financing. Carvana simplifies the process by only offering loans for cars from its inventory, keeping the entire process in-house.

Standout benefits: With Carvana, you can prequalify online without a hard credit check and see personalized estimated terms for each car you browse on Carvana's website. The prequalification offer expires in 45 days as opposed to the 30 days you'd get with most other lenders.

Best for used vehicles

Carmax auto loan.

Not disclosed

Varies by state and contract

• Low minimum loan amount
• Allows co-borrowers
• Financing is only available for cars sold at CarMax
• Prices are non-negotiable

Who's this for? CarMax Auto Finance is a good choice for consumers who are on the market for a used car and want access to a large inventory.

Standout benefits: CarMax's application process is easy and there is no minimum score requirement to qualify. You can use the retailer's prequalification tool to get personalized terms, such as APR and monthly payments, with no impact on your credit.

Further, CarMax offers a Three-Day Payoff program if you find a better loan offer within three days of closing your CarMax loan. For that reason, it pays to shop around for financing if you're going with CarMax — especially since its policy doesn't allow for price negotiation.

Best for refinancing

Autopay car loan.

Starting at 4.67%

Used and new vehicles, refinancing loans, lease buyout

$2,500 to $100,000

24 to 96 months

• Wide loan amount range
• Allows co-applicants
• Loan approval may take up to 48 hours
• Loan funding can take up to two weeks

Who's this for? Autopay is worth considering if you have an existing car loan you're looking to refinance.

Standout benefits: While you can finance a new or used vehicle using Autopay, what stands out is its wide selection of refinancing products. These include both traditional and cash-back financing, as well as lease-buyout financing.

More on our top auto loans

Capital One is a full-service bank known for its competitive products, minimal fees and user-friendly digital experience. To get a car loan with Capital One, you need to buy a vehicle through its auto dealership network.

If you're refinancing, you can prequalify without impacting your credit as well. Capital One will only place a hard inquiry on your credit report when you officially apply.

Auto loan purpose

Co-borrowers allowed?

Credit score requirements

Not advertised

Don't miss: Best Capital One credit cards

[ Return to summary ]

PenFed , short for Pentagon Federal Union, is one of the largest credit unions by assets. You don't need to be a member to apply for an auto loan but will need to sign up for a PenFed membership to receive your funds. To join, open a PenFed savings/share account with a $5 deposit and maintain a $5 account balance to keep your membership active.

If you're interested in refinancing, the online application process is also easy and transparent. You can also prequalify without any impact on your credit to check how much you can save if you refinance with PenFed. Note, however, that PenFed doesn't refinance its own car loans.

MyAutoloan isn't a dealership or financial institution. It's a virtual platform designed to connect car buyers with lenders that best fit their needs — which allows for easy rate shopping. It offers a solid selection of auto loan types, including new and used car loans, lease buyouts and refinancing.

Carvana is an online used car dealer that offers all the same services you'd expect from a traditional dealership: from buying and selling vehicles to providing financing. Once you find the right car offer, you can schedule a pickup or delivery. At this point, Carvana will pull your credit and you'll get finalized loan terms.

Used vehicles only

Yes, with a third-party loan provider

CarMax is a household name in the car-buying industry. The used car dealer is known for its large lots and "no-haggle" policy which aims to simplify the process of purchasing or selling a vehicle. As the largest used-car retailer in the U.S., CarMax also provides financing for the cars it sells.

Not advertised, but the dealer states its finance sources accommodate most credit profiles

Similar to myAutoloan, Autopay is an online platform connecting borrowers with financial institutions. This allows Autopay to work with borrowers of all credit profiles and provide competitive rates.

You can prequalify without a hard credit check to get multiple loan options from banks and credit unions. If you choose a lender to move forward with, the financial institution will perform a hard credit inquiry and review your information and documents to finalize the loan terms. Note that the final approval might take up to two days.

Used and new vehicles, auto loan refinancing, lease buyout

Not advertised, but the dealer states it worked with borrowers of all credit profiles

What is the smartest way to finance a car?

When financing a car, you want to make sure you get the best terms your financial and credit situation can get you.

First, remember that the best deals are reserved for those with high credit scores. If your credit could use some work, it might be a good idea to take time to improve your scores before shopping for a car.

Another thing you might want to think about in advance is the down payment. Putting more money down can allow you to lower your monthly payments and interest charges, shorten the loan and even get better rates. The best practice is to put 20% down on a new car or 10% on a used car.

Additionally, make sure to shop around for lower interest rates. The lower rate you get, the less you'll pay in interest charges over the life of the loan. This can lead to thousands of dollars in savings. Don't worry about the impact multiple hard inquiries will have on your credit: Most credit scoring models will count car financing inquiries made within 14 to 45 days of each other as one.

Further, get the shortest loan term length you can fit into your budget. A longer-term length means more interest paid over the life of the loan. Plus, many financial institutions will give you a higher interest rate to begin with for choosing a longer loan.

Auto loan calculator

Before taking on a new auto loan, it's important to estimate your monthly payments. CNBC Make It offers a handy loan calculator that can help you see how much you will pay monthly, how long it will take to pay off the debt and how much you'll pay in interest.

What credit score is needed to buy a car?

To get the most favorable financing terms when buying a car, you'll need at least good or excellent credit — a credit score of 670 and greater. That said, it's not impossible to get approved for a car loan even with bad credit as specific requirements vary by lender.

Can I negotiate my rate on an auto loan?

You generally can (and should) negotiate interest rates when shopping for a car loan since the rate the dealership gives you can be higher than what the lender proposed, leaving room for negotiation.

Why would a bank deny a car loan?

There are a few reasons a financial institution can reject your auto loan application, including a low credit score, a high debt-to-income ratio or not enough verifiable income.

Bottom line

Whether you're buying a new car or refinancing an existing car loan, take the time to shop around for the best loan terms. Take advantage of prequalification tools many lenders offer and don't shy away from applying with multiple lenders. This strategy will help you not only get the car you'll love but save on this big purchase too.

Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox.  Sign up here .

Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every loan review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See  our methodology  for more information on how we choose the best auto loans.

Our methodology

To determine the best auto loans, CNBC Select analyzed more than a dozen car loan providers, including banks, dealerships and online marketplaces.

When narrowing down and ranking the best car loans, we focused on the following features:

• Flexible minimum and maximum loan amounts/terms:  Each lender provides more than one financing option that you can customize based on your monthly budget and how long you need to pay back your loan.
• Prequalification: Each lender offers prequalification which doesn't trigger a hard inquiry and allows you to get estimated loan terms before applying.
• Online user experience: The lenders on our list make it easy to complete most of or the entire financing process online.
• Ability to add a co-signer or co-borrower: Each lender offers the option to add a co-signer or co-borrower, which can help you get approved and receive more favorable terms. Note that a co-signer generally agrees to be responsible for your loan without getting any ownership rights for the financed vehicle. A co-borrower (or co-applicant), on the other hand, equally shares ownership of the car and loan.
• No early payoff penalties:  The lenders on our list do not charge borrowers for paying off loans early.
• Streamlined application process:  We considered whether lenders offered same-day approval decisions and a fast online application process. 
• Customer support:  Every loan on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
• Loan sizes:  The above lenders provide loans in an array of sizes, from $500 to $100,000. Each lender advertises its respective payment limits and loan sizes, and completing a prequalification process can give you an idea of what your interest rate and monthly payment would be for such an amount.

The rates and fee structures advertised for car loans are subject to fluctuate in accordance with the Fed rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee your interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. To take out a loan, many lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.

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Borrowers urged to apply for Navient's private student loan forgiveness 

Lawmakers want automatic forgiveness of these loans.

Private student loan borrowers, cheated by their schools, have a path toward relief. 

There's been much ado about federal student loan forgiveness with little relief directed to students holding private student debt. However, a little-known program directed by private student loan lender Navient is forgiving private loans for borrowers seeking relief on the grounds that their school lied to them.

The Project on Predatory Student Lending (PPSL) launched a campaign to raise awareness of the servicer's "School Misconduct Discharge Application." The application gives borrowers who experienced misconduct at their school the right to apply directly for discharge of private loans, marking a long-overdue recognition of borrower rights, PPSL said.  

In January 2022, Navient entered into a settlement with 39 state attorneys general regarding its lending practices at several for-profit schools and canceled $1.7 billion in debt on the affected private loan. However, the action only impacted borrowers who had already defaulted. Navient began sending its discharge application to borrowers who complained about their loans but had not defaulted.

For nearly a decade, starting in 2000, Navient—then known as Sallie Mae—engaged in predatory loan practices with fraudulent, for-profit colleges in exchange for a steady supply of borrowers. Many of these loans remain in Navient's portfolio. They are eligible for cancellation due to their misconduct and under the Federal Trade Commission's Holder-In-Due-Course Rule, which allows borrowers to raise the same claims and defenses against a loan provider they could raise against the original seller of the good or service. 

"Today we are making a concerted effort to illuminate the pathways to cancellation available to student borrowers with private loans who were cheated by their schools," PPSL Executive Director Eileen Connor said. "Private student loans have always carried basic consumer protections like borrower defense, yet lenders and servicers have obstructed borrower efforts to realize them, individually or at scale. 

"This Navient application is an opportunity for borrowers who experienced misconduct to finally seek relief for their private loans and is a direct result of our clients' persistence," Connor continued. "We're spreading the word to ensure that impacted borrowers—not just those that Navient hand picks—know that there is a path to relief."

Private student loan borrowers can't benefit from federal loan relief. You could lower your monthly payments by refinancing to a lower interest rate. Visit Credible to speak with an expert and get your questions answered. 

BIDEN WANTS TO GIVE HOMEBUYERS $400 PER MONTH: STATE OF THE UNION

Lawmakers want loans automatically discharged

Navient has set aside $35 million in anticipation of liability to cancel these predatory legacy loans. A group of lawmakers led by Sen. Elizabeth Warren, D-Mass., is concerned that the application process for discharge is too difficult and may leave some borrowers who should qualify for forgiveness out in the cold.

While the PPSL campaign is designed to draw more attention to this program, Navient's 12-page application is complicated and lawmakers are pushing for the lender to automatically provide relief to borrowers using information the company already has about whether borrowers attended schools that would entitle them to relief. Lawmakers want this relief to happen before Navient transfers its 2.7 million student borrower loan portfolio to the Higher Education Loan Authority of the State of Missouri (MOHELA) at the end of 2024. 

"Navient should stop making borrowers apply for relief and instead automatically cancel student debt using information the company already has about whether borrowers attended schools that would entitle them to relief," said the senators. "Given MOHELA's failure to follow guidance on canceling predatory federal loans, it is hard to believe that it will behave any better in canceling similar private loans Navient will transfer to them." 

If you're having trouble making payments on your private student loans, you won't benefit from federal relief. You could consider refinancing your loans for a lower interest rate to lower your monthly payments. Visit Credible to get your personalized rate in minutes without affecting your credit score.

HOMEBUYERS GAINED THOUSANDS OF DOLLARS AS MORTGAGE INTEREST RATES FALL: REDFIN

Federal student loan cancellations hit new high

The Department of Education has wiped out $28.7 billion in federal student loans for more than 1.6 million borrowers whose schools cheated them, saw their institutions precipitously close, or are covered by related court settlements.

Beyond this, President Joe Biden has cancelled roughly $167 billion of student debt for 4.75 million Americans. Forgiveness has primarily come through revamped income-driven repayment plans.

Biden also proposed a new federal student debt forgiveness plan as a follow-up to his initial debt cancellation plan, which the Supreme Court blocked in June . The plan would waive up to $20,000 for millions of borrowers whose balances have grown because of unpaid interest. It would automatically discharge debt for borrowers eligible for loan forgiveness under SAVE, closed school discharge, or other forgiveness programs, even if they are not enrolled. 

Additionally, student debt for borrowers who entered repayment for 20 or more years would be discharged. The plan would also provide relief to borrowers who experience hardship in paying back their loans.

If you're having trouble making payments on your private student loans, you won't benefit from federal relief. However, you could consider refinancing your loans for a lower interest rate to lower your monthly payments. Visit Credible to get your personalized rate in minutes without affecting your credit score.

HIGH HOMEOWNERS INSURANCE RATES SCARING AWAY FLORIDA HOMEBUYERS, OTHER STATES FACE THE SAME ISSUE

Have a finance-related question, but don't know who to ask?  Email The Credible Money Expert at  [email protected]  and your question might be answered by Credible in our Money Expert column.

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Leasing or buying vehicles and equipment

Understand the differences between leasing and buying and which might work better for your business.

On this page

Leasing or buying vehicles

Leasing or buying equipment.

Your business may need vehicles, plant machinery or other equipment. You can often choose whether to lease these items or buy them.

Leasing means you rent the vehicles or equipment from a leasing company that owns them.

Buying means you pay for and own your vehicles or equipment outright. You can apply for a loan if you don’t have enough cash to pay for expensive items upfront.

A motor vehicle is a major expense for your business. It’s important to consider whether leasing a car or buying one is the better option.

Use this table to compare the main differences between leasing and buying.

Tips for leasing or buying a vehicle

• Research the companies you deal with to make sure they’re reputable.
• Shop around to make sure you’re getting the best deal. This includes looking for a good loan rate or lease conditions.
• Work out how much you can afford in lease or loan repayments each month.
• If you’re still not sure whether it’s better to buy or lease, ask your registered tax professional or financial adviser.

Taking out a car loan

If you want to buy a vehicle but can’t pay upfront, your business may be able to get a loan through either a:

• bank or other financial institution
• car dealership.

The car is generally used as guarantee to secure the loan.

Dealer finance

Dealer finance is a type of loan that most car dealerships offer on new cars.

Do your research before signing up for dealer finance. The loan might include rates and fees that add to the cost.

Dealer finance can also include a large payment at the end known as a ‘balloon’ or ‘residual’ payment. This means lower ongoing repayments, but you’ll need to plan for this lump sum when the loan term ends.

Guaranteed asset protection (GAP) insurance

GAP insurance can cover your remaining car loan repayments if your car is written off before you’ve finished repaying it.

You usually need a comprehensive motor vehicle insurance policy before you can get GAP insurance.

Talk to your insurance broker, financial adviser or registered tax professional for more information.

Find out about insurance for your business.

Goods and services tax (gst) and vehicles.

You might be able to claim a credit for the GST you pay when buying or leasing a vehicle for business purposes.

If you only use your vehicle partly for business, you can usually claim a partial GST credit.

To claim these credits you must be registered for GST .

Learn more about GST and motor vehicles.

Most businesses need equipment such as:

• office furniture
• computer equipment.

Do your research before you decide whether to buy or lease what you need. You can have a mix of bought and leased equipment.

Tips for buying or leasing equipment

Make a list .

Write down all the equipment you need before you start buying or leasing anything. Include this list in your business plan . You can update it as your business grows.

Think about your space

Measure your workspace and think about where your equipment will fit. You could use a digital space planning tool to design your space and work out the furniture and fixtures you need.

Choose quality over price

Don’t always go for the cheapest equipment. If it breaks often or doesn’t meet your needs, it could end up costing you more in the long run.

Focus on quality and value, not just the lowest price. This is especially important for your critical items. For example, if you’re running a restaurant, you should get the best knives, pots, pans and cooking appliances you can afford.

Look at consumer reviews and feedback to see if an item is good quality and will do what you need.

Check for local repairers

If you’re buying equipment, being able to get it serviced and repaired it in your area can save you time and money. You should also check if spare parts are easy to buy or import.

If you’re leasing equipment, check whether your leasing company has any approved repairers in your area. 

Consider used equipment

You can often save money by buying secondhand equipment. Think about what equipment you need to get new and what you may be able to buy used.

Use our start up costs template

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What is student loan consolidation?

Will my interest rate go up if i consolidate my student loans, i don’t know if i’m eligible for student loan forgiveness. should i still consolidate my loans, how to consolidate your student loans, what happens if you miss the deadline, student loan forgiveness deadline: there are 10 days left to maximize your debt relief.

You can still consolidate your loans after June 30, but may not receive key student loan forgiveness benefits.

Courtney Johnston

Senior Editor

Courtney Johnston is a senior editor leading the CNET Money team. Passionate about financial literacy and inclusion, she has a decade of experience as a freelance journalist covering policy, financial news, real estate and investing. A New Jersey native, she graduated with an M.A. in English Literature and Professional Writing from the University of Indianapolis, where she also worked as a graduate writing instructor.

Tiffany Connors

Tiffany Wendeln Connors is a senior editor for CNET Money with a focus on credit cards. Previously, she covered personal finance topics as a writer and editor at The Penny Hoarder. She is passionate about helping people make the best money decisions for themselves and their families. She graduated from Bowling Green State University with a bachelor's degree in journalism and has been a writer and editor for publications including the New York Post, Women's Running magazine and Soap Opera Digest. When she isn't working, you can find her enjoying life in St. Petersburg, Florida, with her husband, daughter and a very needy dog.

CNET staff -- not advertisers, partners or business interests -- determine how we review the products and services we cover. If you buy through our links, we may get paid.

Key takeaways

• Consolidating federal student loans that aren’t currently eligible for forgiveness programs could help you qualify for debt relief.
• You must consolidate by June 30th to apply for this one-time benefit.
• You can consolidate your loans online. The process takes about 30 minutes.

If you have federal student loans, an important debt relief deadline is approaching.

You have until June 30 to apply to consolidate your federal student loans to potentially boost your loan forgiveness amount.

The Department of Education has been reviewing past payment counts for borrowers since May 1, as part of a one-time program that will help reevaluate which payments will count towards forgiveness programs, such as income-driven repayment plans like SAVE and the Public Service Forgiveness Program . However, not all federal student loans currently qualify for debt relief programs.

That’s where loan consolidation comes in. If you have a federal student loan that’s not eligible for a forgiveness program, consolidating it into a new Direct Loan could help you qualify for debt relief, get your loans out of default and offer other student loan benefits. But to ensure your previous loan payments are included in your loan’s new payment count, you’ll need to apply for consolidation by the end of June.

For many borrowers, consolidating your federal student loans will help -- but it’s not the right move for everyone. I talked to financial aid expert Mark Kantrowitz to learn more about this one-time consolidation option, how it could maximize your debt relief and who should consider it.

Read mor e: Student Loan Payments Will Be Paused in July for Nearly a Million Borrowers

Student loan debt consolidation is similar to refinancing -- it lets you combine your existing federal student loans into a new loan with a fixed interest rate.

Why would you want to do this? If you hold FFELP, Perkins and other nondirect federal student loans, they may not be eligible for forgiveness programs. By consolidating them into a new Direct Loan and enrolling in an income-driven repayment plan, you may be eligible for automatic loan cancellation, interest forgiveness or other debt relief benefits.

If you qualify for an IDR plan and have been making payments for 20-25 years, your entire balance could be forgiven automatically.

And there are other benefits to loan consolidation. Having one student loan to keep track of, rather than many, can also make it easier to manage payments. Depending on the payment plan you choose, a consolidation loan could lower your monthly payments but also extend your repayment period. But if you’re eligible for forgiveness after consolidating, this might not be much of a concern.

Even if you already have Direct Loans, you might benefit from consolidating if you have more than one with different repayment start dates, said Kantrowitz, who’s also a member of CNET Money’s Expert Review Board .

Private student loan companies also offer debt consolidation for student loans. Even if these programs offer lower interest rates or other perks, converting your federal student loan into a private loan rarely makes sense. Private student loans are not eligible for federal income-driven repayment programs or federal debt relief.

Read more: Did You Default on Your Student Loans? You May Qualify for This Debt Relief Program

If you currently have low interest rates on your federal student loans, you won’t have to worry about your new consolidated rate spiking -- in most cases.

Your new Direct Consolidation Loan’s interest rate will be based on a weighted average of the loans you consolidate and it will be rounded up to the next 1/8th of 1%, according to Federal Student Aid , the Department of Education’s official student loan website.

There’s one exception, though. If you have a FFELP loan, you might lose some benefits when consolidating. “The main issue is borrowers who have a big interest rate reduction from the FFELP lender,” said Kantrowitz. “These discounts are provided by the lender and will disappear if you consolidate the loans.” 

You don’t have to consolidate all of your loans, so you might exclude your FFELP loans if you want to keep your current discount. You’ll need to weigh whether you qualify for forgiveness and how consolidating might affect your monthly student loan payment to decide if consolidating is right for you.

If you have unpaid interest on a student loan, it will be capitalized when you consolidate the loan and could increase your principal balance. Factor that in when deciding how much your new monthly payment would be and how much you may qualify for in forgiveness. 

For many borrowers, consolidating your federal student loans will help lower your monthly payment and could maximize your potential debt relief. If you currently hold federal student loans that are not Direct Loans, it can be particularly beneficial. Consolidating can also help you lock in a fixed interest rate if any of your federal student loans have a variable rate.

The latest student loan forgiveness program takes into account the date of your first student loan payment. Consolidating your loans helps ensure you get credit for your new Direct Loan starting with your earlier loan payment date.

So, let’s say you graduated from college and made your first federal student loan payment in 2004. Later, you went back to school for a second degree and started paying those loans in 2010. Under an income-driven repayment plan with a 20-year path to forgiveness, you might be eligible to have your loans from 2004 forgiven this year. But by consolidating your more recent loans with your older ones into one new Direct Loan, your entire balance could be wiped out this year. 

Even if you graduated more recently, consolidating your federal loans and enrolling in an IDR can help you get access to forgiveness sooner. And if you only have one student loan, if it’s not a Direct Loan, you may also benefit from consolidating. 

But if you don’t qualify for debt relief, it may not make sense to go through this step. “If you are not currently pursuing any kind of forgiveness (e.g., not even IDR forgiveness) and expect to never pursue forgiveness, then you don’t need to do it, ” said Kantrowitz.

You can consolidate your federal student loans online at StudentAid.gov. You’ll need to submit your application before midnight local time on June 30 to meet the deadline. You can consolidate after this date, but would miss out on some benefits.

To fill out the application, you’ll need your Federal Student Aid ID, some personal information, financial information and loan information to fill out the application. The FSA website says it takes approximately 30 minutes to complete the application for consolidating your loans.

You can fill out the application now at studentaid.gov/loan-consolidation . 

Once you apply, it can take up to 60 days to process your consolidation, said Kantrowitz. In the meantime, you might see your student loan payment count drop to zero. Don’t panic if this happens. It just means your adjustment count is being worked on.

If you consolidate your loans after the June 30 deadline, you can still get credit for past payments made on direct loans. But you might not get as much credit. Instead, your payment count would be based on a weighted average or may reset to zero. But, you could still gain access to a debt relief program.

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Another 277,000 borrowers received student loan forgiveness last week. here’s how you can, too, 25 million americans could have student loan debt wiped out under biden’s latest plan, do you qualify for the new student loan forgiveness plan, smart money advice on the topics that matter to you.

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Money blog: Interest rate announcement imminent

The Money blog brings you personal finance and consumer news, plus all the latest on the economy. Let us know your thoughts on any of the stories we're covering in the comments box below.

Thursday 20 June 2024 11:49, UK

• Interest rate announced at midday - how does Bank of England decide?
• Aldi tactic forces Tesco 'to pull products from sales campaign'
• Barclays ditching major perks - but customers will still pay £5
• Savings queen shares top three tips for savers right now
• Taylor Swift makes £450 kebab shop order

Essential reads

• Watch : Ed Conway breaks down inflation numbers - and shows chart that tells very different story
• 'One guy wanted to rent my room for a few hours to meet a friend...' What I learnt from putting my home on Airbnb
• Women in Business : 'How I went from mum with no qualifications to owner of big law firm'
• Holiday money - where to buy it, how to avoid fees and one thing you must not do
• Best of the Money blog - an archive

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The average first-time buyer needs a household income of more than £60,000 to get on to the property ladder, according to Zoopla. 

It estimated that the typical first-time buyer needs £14,900 more than five years ago and £2,400 more than a year ago - a total of £60,600.

The analysis was based on average asking prices of first-time buyer homes for sale on Zoopla of around £250,000.

Those earning figures are based on having a 20% deposit to hand - it would likely need to be much higher if a first-time buyer did not have so much cash to put down up front. 

Startlingly, in London, Zoopla found first-time buyers would need a household income of at least £103,000.

In Wales, they would need £38,800 and in Scotland £31,500, according to the calculations.

Izabella Lubowiecka, senior property researcher at Zoopla, said: "The challenges facing first-time buyers are not the same across the UK.

"Access to homeownership requires lower incomes in much of Wales, northern England and Scotland. 

"The greatest challenges are in southern England, especially London where first-time buyers are already buying cheaper homes than the average in an effort to try and improve affordability."

By Daniel Binns, business reporter

There's not much major movement on the London stock market this morning ahead of the Bank of England's announcement on interest rates at midday.

The Bank is widely expected to hold rates at 5.25% for the seventh time in a row.

The FTSE 100 is slightly up by nearly 0.2%, while the FTSE 250 has risen almost 0.3%.

Rolls-Royce is among the top climbers, with its stock rising by 2% in early trading.

Sainsbury's has also gained almost 1% after the supermarket giant announced it plans to sell most of its banking business to NatWest.

On the flip side, top fallers include water firm United Utilities, which has slipped 2% on Thursday morning.

On the currency markets, £1 buys $1.27 US or €1.18.

The cost of a barrel of Brent Crude has topped $85 (£67) this morning, as the price of oil continues to creep slowly up.

Aldi has undercut Tesco on some of its rival's claimed price matches, according to The Grocer . 

As a result of Aldi dropping its prices, Tesco has pulled certain products from its campaign, according to the digital magazine, and in some cases it is rendering the supermarket's price match claims incorrect.

According to The Grocer, two variants of Aldi's Lunex Ultra sanitary towels (Night and Long) were "price matched" at 45p by Tesco this week, while Aldi had reduced them to 42p in its weekly permanent price drops.

In a similar vein, the magazine said Aldi's Bon Appetit Pains Au Chocolat eight-pack was price matched by Tesco at £1.35 on 6 June - before being cut to £1.29 at Aldi.

Tesco's equivalent had disappeared from Tesco's campaign by 13 June. 

"Our customers know that only one supermarket offers Aldi prices on every product and that's Aldi," an Aldi spokesman told The Grocer. 

"Other supermarkets just can't match us on that." 

Tesco said prices were checked twice-weekly and the most recent check on the Lunex sanitary towels found them to be 45p in more than half of Aldi stores surveyed. 

A spokesman told The Grocer products included may vary by week, with some removed and others added. 

Basically, the Bank of England is the UK's central bank.

It is different from a bank you would come across along the high street and does not hold accounts or make loans to the public.

Instead, the Bank issues banknotes that you spend and it also sets the official interest rates of the UK (otherwise known as the Bank/base rate), which directly influences savings and mortgages. 

The Bank is set to make one such decision today, with markets expecting rates to be held once again at 5.25% - despite yesterday's positive inflation announcement...

When did the Bank become independent? 

The Bank was founded in 1694 and was owned by various shareholders until it was nationalised in 1946.

It remains owned by the UK government today - but its decision-making was made independent in 1997 by Gordon Brown, the chancellor at the time, to increase confidence in the UK economy and stop politicians from influencing monetary policy for political or electoral reasons. 

What is the Bank's Monetary Policy Committee and who sits on it?

The Monetary Policy Committee (MPC) decides the Bank rate.

This generally happens every six weeks, so eight times a year, and the next meeting is today - hence which we're resurfacing this  Basically .

The committee is made up of nine independent members who all have expertise in economics and monetary policy.

There are also external members that ensure the MPC benefits from thinking and expertise from outside the Bank of England.

A representative from HM Treasury also sits with the MPC at its meetings. The Treasury member makes sure the MPC is briefed on government policies, but they are not allowed to vote.

Does the Bank have any other responsibilities?

• The Bank produces £5, £10, £20 and £50 banknotes;
• It guards the value of money by keeping prices stable;
• It keeps the financial system stable by maintaining a close watch on any risks and taking action;
• The Bank also regulates and supervises all the major banks, building societies, credit unions, insurers and investment firms.

Why is it called the Bank of England when it covers the whole UK?

Quite simply, it has never changed its name since it was founded. 

It was created in 1694 after a Scotsman named William Paterson realised the nation's finances had no real system of money or credit. 

Under his direction, a successful scheme was launched in which £1.2m was loaned to the government from funds raised by subscribers who were then incorporated into the governor and company of the Bank of England. 

The money was used to support the English government in its war against France. 

It wasn't until the 19th century that the Bank took on the role of central bank. 

What is in its vaults? 

About 400,000 bars of gold. 

These are worth more than £200bn, making the Bank of England the second-largest keeper of gold in the world - behind the New York Federal Reserve. 

The gold is kept in nine carefully guarded underground vaults. 

Each bar costs hundreds of thousands of pounds, although the value can go up and down. 

The Bank of England's customers - who include the UK government, banks and other governments around the world - can trade their gold bars with other customers. 

When a customer trades gold it doesn't usually move - instead the name of the owner will change on the Bank's system. 

Not many people are allowed to visit the vaults, but the King and the late Queen have seen them. 

Has anyone ever stolen any gold from the Bank?

The Bank says no gold has been stolen from its vaults, but there was a lucky escape in 1836 after a sewer worker doing repair work accidentally discovered an old drain that ran directly below the gold vault. 

He sent anonymous letters to the directors of the Bank, saying he had access to their gold and offering to meet them in the vault at an hour of their choosing.

When the directors gathered one night in the vault, a noise was heard from beneath the floor and the man popped up through some of the floorboards. 

A stocktake was taken afterwards, and it became clear he had not taken any gold. 

The Bank then decided to reward the sewer worker for his honesty by giving him £800 - the equivalent of about £76,000 today. 

Barclays has announced a major revamp of its Blue Rewards scheme - which will remove its £5 a month cash bonus. 

All other product cash rewards for members are being axed as part of the shake-up as well. 

As a result, customers will no longer earn rewards worth up to £15.50, including:

• £3 for residential mortgages
• £1.50 for life insurance
• £5 for life plus critical illness
• £1 for Barclayloan

The changes will take effect from 4 September. 

Despite the changes, Barclays customers will still need to pay the £5 monthly fee to be a member. 

Not all the rewards are being cut though - the membership will get you Apple TV+ (worth £8.99 a month), a Major League Soccer Season pass subscription that usually costs £14.99 and access to a Rainy Day Saver account that comes with a 5.12% interest rate on balances up to £5,000. 

The bank is also introducing a promotion increasing the value of cashback on Blue Rewards, with customers able to earn 1% on all eligible debit card spend up to a value of £5 each month.

The promotion runs from September to November and rewards are in addition to existing retailer cashback offers.

Barclays said the revamp would give customers fixed benefits worth up to £44 a month - an increase from £35.50 previously - in addition to cashback and higher interest on savings.

Manuel Baldasano, head of customer and digital at Barclays UK, said: "We've been evolving Blue Rewards based on what we know our customers value and, with entertainment high on their wish list, we're delighted to introduce top quality shows from Apple TV, in addition to our best savings rates and cashback programme, all for the same £5 monthly fee.

"Our refreshed Blue Rewards proposition, which sits alongside our fee free account and Premier banking, means that customers can choose what works best for them." 

Every Thursday  Savings Champion founder Anna Bowes  gives an insight into the savings market and how to make the most of your money...

The savings market is a little bit unpredictable at the moment. Some rates are rising and others are falling - and some of the banks and building societies seem to be holding their breath, waiting to see what the Bank of England does today when it announces its latest interest rate decision. Add a general election to the mix and it's anyone's guess.

What we have seen recently is that the expectation for the base rate cut has been pushed back repeatedly, as inflation remained a little stickier than hoped.

Although in general the top rates on offer are still a little lower than they were at the beginning of the year, because the base rate cut has been delayed, there has been a resurgence of positive activity recently.

All of the top five easy access accounts are paying more than 5% once again, not much less than the top one-year fixed rate bonds and in fact more than the top paying longer-term bonds.

This is a really telling indication that interest rates are still expected to fall in the next few months and years and of course, easy access account rates are variable, which means that when the base rate does start to fall, you can expect the interest rates on these accounts to come down too.

The most amount of activity recently has come from one-year fixed rate cash ISAs - these rates have been increasing, narrowing the gap between the top fixed rate bonds and equivalent ISAs. In January, the top one-year bond was paying 5.5% compared to 5% on the top ISA. Today the top bond is paying a little less, 5.21%, while the top ISA is paying 5.05%, which is actually higher than in January - but that is the Virgin Money 1 Year Fixed Cash ISA Exclusive Issue 13, which needs you to hold or open a current account with Virgin to be eligible. 

But the next best is with Shawbrook paying 4.89%, so the gap is still narrower.

The latest inflation figures support the idea that the base rate cut is coming, though whether that is today or at one of the next Monetary Policy Committee meeting in August or September is still to be seen.

Here are our top three tips for saving in these uncertain times...

Don't leave your cash to languish

After the latest inflation figures, it's probably harder to find an account that is paying less than inflation - as most are now offering interest rates that are keeping up with the rising cost of living. 

But there are accounts out there that are not!

The Barclays Everyday Saver is paying just 1.66% AER (before the deduction of tax) on the first £10,000 in its Everyday Saver. If you have more, the interest rate you earn is diluted as the balance above £10,000 will earn just 1.16% AER.

 And HSBC's Flexible Saver is paying just 2% on all balances from £1 - matching, not beating inflation. But you could be earning more than 5% if you were to switch to a better paying easy access account.

Use your ISA allowance

As more and more people are breaching their Personal Savings Allowance, they are turning to cash ISAs once again to shelter more of their cash savings from the taxman. 

Don't wait until the end of the year to use up this valuable allowance. 

The sooner your cash is in the ISA, the sooner it is earning tax free interest.

If you can - fix!

With the Bank of England base rate on the cusp of falling, if you can lock up some of your cash you could protect yourself from immediate interest rate cuts that we expect to see on variable rate accounts.

And, while a longer-term savings account might offer less interest immediately, it could be a wise idea to lock up some of your cash into these accounts, as it would be good to think that at least some of your savings is hedged against falling interest rates and enjoying a return that is higher than inflation for longer - something that is rarely the case.

Couriers for delivery giant Uber Eats will now pick, pack and pay for customer orders inside supermarkets.

Uber global head of grocery Susan Anderson said: "It's very clear that grocery shopping trends have fundamentally changed. 

"Our busy lifestyles mean we physically go to the supermarket for a big shop less frequently and prefer to rely more on apps like Uber Eats to order fresh grocery ingredients when we want them."

The couriers can engage with customers in real time as they shop - so they can ask shoppers what substitutions they want if items are out of stock.

The driver will then checkout using a pre-authorised payment method before delivering in the normal fashion.

It's not yet clear how much more this will cost customers. 

Wall Street's biggest bank is lifting Brussels' bonus cap for its London-based staff , weeks after rival Goldman Sachs fired the starting gun on a post-Brexit era in industry pay.

Sky News can reveal that JP Morgan Chase was in the process of notifying staff on Wednesday that it would preserve some elements of the remuneration packages introduced after the European Union's cap on variable pay came into force in 2014.

The system prevents material risk-takers (MRTs) working in lenders' operations in the EU from earning more than twice their fixed pay in variable compensation.

Sources said that JP Morgan, which employs 22,000 people in the UK, including roughly 14,000 in London, had decided to preserve a significant proportion of the fixed pay allowances used to calculate eligible employees' maximum bonuses.

You can read more of our City editor Mark Kleinman's story  here ...

McDonald's is ending its AI drive-thru trial  after customers reported errors in their orders - including bacon being added to ice cream.

The fast food chain's AI ordering system, developed by IBM, uses voice recognition to process orders and has been rolled out at more than 100 McDonald's locations in the US since 2021.

However, the technology's reliability has been called into question in recent months, with members of the public sharing videos of order mix-ups on social media.

As well as topping a dessert with bacon, the AI drive-thru assistant added $211 (£166) worth of chicken nuggets to another customer's order.

Mastercard has announced it will be changing the way customers make payments  to bring them a contactless experience at online checkouts. 

The card company has said it wants all online transactions to be "tokenised" by 2030. 

The way it will work means you will input your card details to pay for a product once and then you'll receive a "token" - a randomly generated number. 

That number can then be used to make future payments, instead of you having to type in your card details each time. 

"Contactless payments have made in-person payments seamless and ubiquitous – there’s an opportunity to bring that same experience to online checkout," it said in a statement. 

Mastercard said the move will reduce fraud, improve approval rates, and make it online checkouts "faster and safer". 

"As physical and digital experiences continue to converge, we're pushing the boundaries of what's possible," said Jorn Lambert, chief product officer at Mastercard.

"We're focused on bringing best-in-class digital services together to deliver more value, access and safety to our customers and the end-consumer." 

It's been a really difficult few years for millions of families paying for their energy. 

Many have expressed their anger and distrust in energy suppliers as a result of spiralling prices and shifting goalposts. 

But there are signs that's beginning to change.

Overall customer satisfaction is up 10% since last year, a survey of 15,030 energy customers by Uswitch.com has revealed. 

The survey found that Utility Warehouse and Octopus Energy were the best and second-best at providing customer service and for value for money. 

However, satisfaction with value for money from providers overall is still 17% lower than before the energy crisis, according to the poll.

Uswitch also announced its top five cheapest energy tariffs - see below... 

Every Wednesday we ask Michelin chefs to pick their favourite Cheap Eats where they live and when they cook at home. This week we speak to  Sofian Msetfi, executive chef at Mayfair's one-starred Ormer restaurant.

Hi Sofian - what are your picks for a meal for two for less than £40 in London?

Berenjak  in Soho and London Bridge offers a traditional Persian dining experience - I'd recommend ordering a charcoal grilled kebab for that tables plus a selection of the mezeh-style sharing plates to accommodate a budget of £40 for two. A brilliant dining experience with high-quality and fresh ingredients.  

BAO  (with locations around London) is known for its creative take on Taiwanese street food. They offer some of the best bao buns in the city which start from just £6, plus there's affordably priced small plates, allowing for a diverse tasting experience without overspending. The restaurants also have a weekday set menu with three courses for £15, which is a steal.

Secret Sandwich Shop  in Notting Hill elevates the humble sandwich to new heights - the sheer size of the Japanese Wanpaku sandwiches are incredible and so filling. It's a great find, hidden behind a secret door in Notting Hill, with the signature "Secret Sandwich" priced at £9, meaning you can each get a sandwich plus a generous selection of classic snacks and even some Japanese drinks for £40. 

What's your go-to cheap meal at home?

A braised lemon chicken with green olives. You can use chicken thighs or legs in this recipe (which are often much cheaper). It's easy and quick, everything goes in the dish together and cooks at the same time. One of my favourite tips is to use some of the olive brine from the jar when cooking as it really enhances the flavour of the dish.

We've spoken to lots of top chefs and bloggers - check out their cheap eats from around the country here...

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