Take it easy: find the best deals in business vehicle financing

Entrepreneur, Dec, 2005 by Jill Amadio

NEGATIVE EQUITY could be adversely affecting your business. Kelley Blue Book's market research shows buyers who financed with little or no money down and for a six- or seven-year term find they owe more than the vehicles are worth, piling on debt.

Researching financing options is a snap if you know how to navigate the internet, and shopping around and arming yourself with information before you visit the dealership can save you percentage points in the long run. Find out if you qualify for your own bank or union loan, and know your credit score so you're prepared for high financing rates if your score is low.

Some business owners use credit cards for down payments on vehicles. OPEN from American Express provides its Platinum Business FreedomPass card users with a credit line up to $50,000 and no annual fee. If your employees use the cards for purchases such as fuel, repairs and other business items, you earn points.

Fleet and commercial customers at GM have an edge with a Business Choice card that offers incentives, promotions and credit, including 3 percent off GM vehicles. Targeted at small businesses that buy or lease vehicles, Chase Business Card offers more benefits, including an expense-management tool that has spending limits for employees.

General Motors Acceptance Corp. offers several fleet-financing options. The Commercial SmartLease program allows customers to pay for only the time period they expect to use the vehicle during the lease term, plus a rent charge, taxes and fees. The advantage of this over traditional purchase financing is that it lowers monthly payments for better management of your cash. There are no re-sales or trade-ins to worry about, and there could be tax benefits. Another GMAC plan, ComTRAC, allows qualified buy or lease customers to select specialized upfits in the vehicles. Unlimited mileage is offered, and there are no excess wear-and-tear charges, which are often a blow to the budget.

Car companies have their own financing arms. Ford's commercial credit lending arm at www.fordcredit.com has many financing programs, including flexible term limits, simple billing systems and statements, and a no-float period after payments are received. Ford's CommercialLeasePlus and CommercialLease both offer open- and closed-end lease lending programs with tax advantages.

At Chrysler, the Business Vehicle Finance Group provides custom financing packages. The group offers payment plans to suit your business cycle, with delayed first payments, token payments, and balloon or accelerated payments.

Several independent financing services will help businesses lease or buy. Primus Commercial Lending (www.primuscredit.com) offers an open-end leasing program geared specifically toward the commercial customer, generally with no down payment, flexible terms and residuals, and consolidated monthly billing. Another lender, PHH Arval, works with businesses to tailor a financing program with several funding choices, such as a floating funding source that allows you to switch to another rate for the remainder of your vehicles' service lives, or a one-time Option to fix the rate of interest on a vehicle-by-vehicle basis.

ONLINE EXCLUSIVE: Still looking for more? Visit our Commercial Vehicle Center at www.entrepreneur. com/vehiclecenter for articles on buying pre-owned vehicles and the latest extras and options available for 2006.

JILL AMADIO is Entrepreneur's "Wheels" columnist.