Auto Line of Credit: Apply and Get Funds Today!

An auto line of credit is a type of business financing that allows you to borrow money against the value of your vehicle fleet. It allows for quick access to funds, enabling your business to meet cash flow needs, make purchases, or invest in opportunities.

In this guide, we’re going over everything you’ll need to know about an automobile line of credit and how to unlock extra cash for your business. Let’s get started.

Auto Line of Credit: What Is It and How Does It Work?

An auto line of credit is a financing tool that allows businesses to borrow money using their vehicles as collateral. It works similarly to a traditional line of credit, with the main difference being that credit is backed by a car, truck or another piece of equipment.

Many businesses own and operate vehicles that often carry a significant amount of unlocked value. An automobile line of credit gives you access to the funds latent within your asset by granting you a business line of credit. It’s a way to gain some liquidity from an otherwise dormant asset.

Auto lines of credit are also similar to auto equity loans, as both rely on the vehicle as collateral in exchange for funding. However, lines of credit are inherently more flexible than the latter.

Once the auto line of credit is set up, your business will be able to withdraw money up to the limit as needed. Funds can be used for a number of business-related expenses without obtaining prior approval from the lender. In some cases, you may even be able to access your credit again as you make payments on your balance. This gives you a consistent reservoir of cash at your side to be ready to put to use at a moment’s notice.

Advantages of Auto Line of Credit

An auto line of credit can be a great way for your business to gain additional liquidity. Take a look at some of the benefits funding in this form can offer.

Aside from the many benefits of this funding type, it’s also important to be aware of the potential drawbacks. As with any type of collateral-based financing, you should thoroughly evaluate the risks before borrowing funds.

Your lender will retain the right to seize your vehicles in the event that you’re unable to make payments on your balance. In short, you risk jeopardizing your asset in case of default. This is why you always want to borrow responsibly and ensure that you’re staying on top of all your payments.

Auto Line of Credit: Amount, Repayment, & Time to Fund

The auto line of credit your business is approved for will depend on the type of lender you work with and your own business’s criteria.

Credit limits tend to be based on the creditworthiness of a business, its financial stability, and its ability to repay debt. In general, the average auto line of credit limits can range from several thousand to upwards of $1 million.

Unlike auto equity loans, auto lines of credit feature flexible repayment terms. You can choose to make monthly installments, pay off your entire balance at once, or make minimum monthly payments for a longer repayment period.

Here’s an outline of what you can expect from an automobile line of credit.

To ensure you’re getting the best deal, you’ll want to use a B2B financing marketplace to compare multiple offers at once. National Business Capital is a leading platform that can help you select the best financing offer based on your business’s unique qualifications.

How Can You Use Your Auto Line of Credit Funds?

Auto lines of credit can be used for just about any type of business expense. Take a look at some of the most common ways entrepreneurs put this funding type to work.

• Working Capital Management: Manage day-to-day business expenses without depleting your own cash reserves or relying on your personal finances. Use a line of credit to cover payroll, rent, utilities, and more.
• Vehicle Repairs: Repairs on trucks, vans, and other types of business vehicles can be costly. Instead of footing the expenses all at once, a line of credit can make things easier on your cash flow by breaking down major costs into more manageable payments.
• Manage Seasonal Fluctuations: With a line of credit, your cash flow isn’t tied to any specific season. Use funding to navigate slow periods, cover off-season expenses, and prepare ahead of time for peak seasons.
• Emergency Expenses: Gain a financial safety net that allows you to manage unexpected costs with ease. Whether it’s last-minute repairs, market downturns, or other unforeseen issues.
• Capitalize on Opportunities: With an extra reservoir of cash at your side, you won’t have to worry about missing out on any opportunities to grow your business. Use your credit line to invest in marketing initiatives, buy inventory in bulk, or purchase critical assets upfront.

How Do You Qualify for an Auto Line of Credit

Qualifying for an auto line of credit means meeting the requirements set out by your lender. Some lenders maintain lower approval odds than others. In general, banks and credit unions tend to have the strictest requirements but online lenders can be more lenient.

Obtain an overview of the different auto line of credit offers your business qualifies for through National Business Capital. With a single application, you’ll be matched with personalized financing solutions from our network of over 75 different lenders.

We offer solutions for businesses with various credit scores, revenue levels, and other criteria. At a minimum, here is what you’ll need to qualify.

Minimum Credit Score: 580

A good credit score demonstrates your ability to manage your business’s finances and make payments on time. Businesses with stronger credit will not only have a better chance of approval but also gain access to more favorable rates.

Minimum Annual Revenue: $500,000

You’ll need to show that your business is bringing in enough recurring revenue to manage daily expenses and make payments on your balance. In general, minimum revenue requirements hover around 10k a month or 120k a year.

Time in Business: One Year

In general, lenders can be hesitant to approve newer businesses for funding since they tend to carry more risk. If your business has less than a year of history, you may have a more difficult time qualifying.

Other Requirements

The vehicle you’re using as collateral for your line of credit will have to be approved by your lender. You can expect to have to go through some type of appraisal process to determine the value of the vehicle. There may also be some restrictions on the model and vehicle make. It’s best to consult with your lender for the specifics of whether or not your vehicle fits the criteria.

Auto Line of Credit: Learn Our Quick Application Process

One of the main advantages of applying for an auto line of credit with National Business Capital is the quick and straightforward application process. While banks and credit unions are known to take weeks to review and deposit your funds, our financing solutions can be processed within several business days.

Step 1: Complete the Online Application

By following the steps outlined in the online application portal, you’ll be able to submit within just a few clicks. You’ll be asked to upload some basic information about your business and its finances. You can rest assured that all the documents you provide will be fully protected by the latest encryption tools.

Step 2: Receive Your Personalized Auto Line of Credit Offers

Once your application is submitted, it will be reviewed by National Business Capital’s network of lenders. You should begin to receive a decision within a matter of days or even hours. You may even receive multiple financing offers. You’ll have the liberty to compare and select the best solution based on your business’s needs.

Step 3: Get Funded

As you review your different funding offers, make sure to read the terms and conditions and understand the implications of each. Keep in mind that National Business Capital’s expert business financing advisors are with you every step of the way. They can help answer questions and offer guidance to ensure you’re selecting the right solution.

After you’ve accepted your auto credit line offer, you’ll be able to start withdrawing funds and putting them to use in no time!

Apply for an Auto Line of Credit

Ready to see the auto line of credit options your business qualifies for? Complete our digital application to provide some basic information about your business, then be on the lookout for a call from a Business Finance Advisor to go over the finer details.