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Business auto loans are one of the most basic kind of loan you can get as a business owner. These come in many different forms from utility trucks, transport vehicles, bulldozers, to limousines, hearses, combines, to regular passenger vehicles used in the furtherance of your business.

If the vehicle is over 6000 pounds Section 179 of the Internal Revenue Service (IRS) tax code allows a company to deduct the full purchase price of certain equipment and, oftentimes, a large vehicle or SUV may qualify.

The legal deductions for business autos are some of the most misunderstand deductions in the IRS Code. The safest way is to connect with a Certified Public Accountant (CPA) and pay for their professional advice.


Most of these auto loans are short term initially: three to five years. They are typically higher interest rate and some lenders simply do not like to do them. In our opinion, Credit Unions offer the most competitive rates on auto loans. In certain instances, the lender will ask for a UCC filing on the title which simple indicates that they have a security interest in the auto. That way, if someone was to attempt to sell the vehicle, the purchaser would be put on notice that a lien, or filing, against the vehicle must be paid prior to ownership being transferred. This UCC filing acts as the lender’s insurance policy and secures their interest in the vehicle. If this UCC filing is not filed with the State DMV, an unscrupulous person could sell the vehicle for the full amount and walk away from the lender. In this instance, the lender would be unaware of the transfer of ownership of the vehicle on which he gave the loan.

An auto loan can be for the full purchase price and the amount of the vehicle is simply broken up into equal monthly payments for the term (number of years) of the loan.

Another way lenders do auto loans is to ask for a few thousand dollars as a down payment and then finance the car over a period of time with a buyout, at a fixed price, once the payment terms are up.

As with all loans, different lenders have ways to lend auto loans that are specifically germane to them.

Please consult a tax professional before making an auto loan decision.

Borrower loan tips:

• Check your monthly payments with our Business Loan calculator.