People Also Ask:
Why Do Car Dealerships Need Business Loans?
The stability of the automotive industry is directly linked to the general economy. When the economy takes a turn for the worse, virtually all dealerships feel the impact to some degree. Business loans can help dealerships meet their current obligations and maintain relevance during rough patches.
Also, car dealerships don’t make any money from trade-ins until they sell the vehicle. But does that mean they shouldn’t stock up on trade-ins now that used cars are so popular? Business loans can come in handy when dealerships are acquiring trade-ins in the months leading up to a busy period.
Another reasonable use of business loans for car dealerships is marketing. Ever wonder why used car dealerships tend to slash prices so aggressively? It’s because they haven’t sold their cars as quickly as intended. The dealership is merely trying to minimize the loss. Why didn’t the vehicle sell at its original price? Odds are, it’s because the dealership failed to market the vehicle correctly. With the right marketing strategy, dealerships don’t have to slash prices and lose out on profits.
Is Collateral Required For Business Loans For Auto Repair Shops And Car Dealerships?
No, business loans for either industry do not require collateral. However, if you can provide collateral, you may be able to offset issues with credit or cash flow that would have otherwise resulted in higher rates or lower borrowing amounts. Before assuming you can provide collateral, contact the business loan provider to make sure they accept your desired type of collateral. And the value of collateral might not directly reflect your permitted borrowing limit. For example, $10,000 worth of collateral might be able to get you a $6,000 loan with a competitive interest rate.
How Do You Qualify For Business Loans for Auto Repair Shops and Car Dealerships?
This depends on where you apply and the product you have in mind. If you’re looking for a bank loan, you’ll need excellent credit, perfect cash flow, collateral, plenty of money in the bank, high annual revenue, and at least two years in business.
Products from companies like United Capital Source are much more accessible. Your ability to meet the requirements mentioned above will determine your borrowing amount, rates, and terms. But falling short in any (or more than one) of these areas won’t stop you from qualifying from multiple products. With some products, your credit score is practically irrelevant. For example, eligibility for a Merchant Cash Advance is based on the size and volume of your debit and credit card sales.
Can I Get a Business Loan For Auto Repair Shops or Car Dealerships With Bad Credit?
Yes, five out of the seven aforementioned products are accessible for borrowers with bad credit. Your rates may be higher, and your terms may be shorter because bad credit makes you more likely to default. However, if you have strong cash flow or can provide collateral, your bad credit may have less of an impact on your rates and terms.
The only two products that are not accessible with bad credit are Business Term Loans and SBA Loans. These products carry high borrowing limits, low rates, and long terms. The other five products usually carry shorter terms and are much easier to repay. We can also customize your terms and payment frequency to ensure that you can make payments while staying current on other bills.