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Can I Transfer My Financed Car to My LLC? Process & Benefits

Max Smith

Reading Time: 7 minutes

While managing various business activities, you might realize the importance of having a vehicle. So, you may consider transferring your personal vehicle, which you brought on loan, to your LLC. Then, a question may arise: “Can I transfer my financed car to my LLC?”

However, you may need to maintain some formal steps and complete your paperwork. Apart from this, your lender’s opinion also plays a crucial role here. Eventually, it will be beneficial to you and your LLC.

In this article, you will explore the process and benefits of transferring your financed car to your LLC. So, let’s explore the details!

Check out a few essential steps when transferring your vehicle to your LLC.

Register Your LLC

If you have a business, apply for LLC registration in the state where you operate your business. Usually, its cost ranges from $100 to $800. 

Prepare the “Articles of Organization,” the “Operating Agreement,” and other essential documents. Plus, you may also need to hire a registered agent.

Contact With Your Insurance Agent

Do you pay insurance premiums on your car? Then, consult the insurance agent before transferring the car title to your LLC. Insurance premiums may get higher when the vehicle goes under LLC ownership. As a result, it becomes cost-prohibitive. 

Moreover, getting the LLC as a friendly lien on the vehicle’s ownership is possible. A friendly lien is a contract in which the LLC loans the asset to the owner. There will be no payments necessary until demanded by the LLC.

In addition, you will get friendly lien contracts from local Chamber of Commerce websites, small business associations, or online legal form providers.

Ask Your Lender

Did you get a loan for the car? Then, ask your lender first before transferring its ownership. You may fill out the form and apply to your lender for permission. They will provide a legal application mentioning its lien-free status. 

So, the LLC won’t pay its loans, but you will pay until you pay off the whole loan amount. Lastly, the lender can be a bank or any other financial institution.

Title Transfer

Go to your state’s DMV and collect the title transfer application form. Fill it out and submit it with the requested documents and fees.

You may request the new car title and show the “Articles of Organization.” Once your request is approved, the local Department of Motor Vehicles will provide the new title for the car and your LLC’s name!

Sales Tax

There is no sales tax for transferring a personal vehicle to your LLC. So you do not have to pay any taxes for the title transfer. But you may need to pay other vehicle-related taxes.

Vehicle owners may claim vehicle-related tax deductions depending on other vehicle-related expenditures or a fixed mileage rate, according to IRS publication 583.

Updating Records

Now it’s time to update all the LLC papers and show that your LLC has a vehicle. Notify all the related agencies and third parties about owning a car. So, the state or government should help you maintain legal compliance.

Lastly, you can get expert service provider help to complete the car title transfer process. But do you know how to transfer your financed car title to your LLC? There are some crucial steps to follow. Read the next section to know it better!

Can I Transfer My Financed Car to My LLC After Loan Approval?

You can transfer your financed car to your LLC even after the lender approves the loan. But it depends on your loan agreement and the help of your lender. 

Usually, a car loan transfer to an individual is complex. But it’s easy to transfer the car loan to an LLC. However, you must maintain paperwork and state law. 

In addition, if your LLC is older and in good standing, it will be easy to transfer the car with the loan to your LLC. Otherwise, you may transfer the vehicle to your LLC, but you must repay the loan yourself.

So, if anyone asks you, “Can I transfer my car loan to my business?” Reply with a big yes!

Now let’s see the steps below to make the car title transfer with the loan go smoothly.

Analyze Your Contract

Go through the contract with your lender. There may be some terms and conditions regarding the title transfer of the property. 

For example, there can be a condition of extra fees if you transfer the car title to a third party. If you find the conditions, you can discuss them with your lender or follow the terms and conditions.

Also, look for the required amount to repay the loan. It will help you understand the income level, set the credit score, and other contributing factors that can affect the property title transfer.

Get Help from Your Lender

Talk with your lender to find a way to transfer your vehicle to your LLC. Most of the lenders have ways to help the loan receiver. The lenders have their own set of rules to protect their loans and company. But you can talk with them and find a way to transfer the vehicle to your LLC.

Submit Necessary Documents

You can get the form once your lender permits you to transfer a car loan to your LLC. Please fill out the details of the form and submit it with the required documents.

There are various documents to submit, such as the business financial statement, the business registration document, and more. It will help show the LLC’s capability to finance the loan and a good credit rating.

Lastly, you may need to fill out a personal guarantee form.

Wait for Your Lenders Decision

Now, you must wait, as you have already approved and submitted documents for your car with the loan transfer. The lender will review your application and other documents to make a decision.

Title Modification

Once the lender approves your application, you can transfer the car title to your LLC. Visit the DMV office with a valid ID and a bill of sale. It will help to describe the transfer conditions. 

You may also make the monetary payments and show other necessary documents. Finally, complete a specific form and finish the title transfer job.

Car Insurance

Whether the vehicle is under personal or LLC ownership, it needs insurance. You must inform your insurance company before transferring the title to your LLC. They may have different laws and procedures for a business entity like an LLC.

Furthermore, yes, the steps are a bit complex, but you should steadily follow them to enjoy the benefits. Wondering what the benefits of transferring a car title to your LLC are? Read on to find out!

Benefits of Transferring Car to LLC

Undoubtedly, transferring a car to your LLC is beneficial. Let’s see some of the significant benefits below. 

Privacy

Do you want to keep your identity private as the owner of the car? Then transfer it to the LLC. You can use the car under LLC ownership. In that way, you can easily maintain your privacy.

Liability Protection

Why is LLC so famous? It provides the advantage of limited liability. If you have personal debts, your car is not at risk as it is now an LLC’s property. 

Moreover, you don’t need to bear the expense if the vehicle meets with an accident and causes damage. The LLC will cover the penalty fees and your medical expenses.

Tax Deductions

Vehicle expenses are tax-deductible. There are various expenses, such as gasoline, oil, wiper fluid, unexpected repairs, etc. You can include all of them in your business income taxes. But to enjoy the tax benefits, you may need to keep detailed records of your receipts, mileage, and bills.

Expense Deductions

You can use the IRS’s standard mileage rate for expense classification. According to the IRS, the standard mileage rate is 67 cents per mile in 2024. Moreover, you can also add the actual expenses for the business usage of the vehicle.

Separation Line

If you transfer your property to an LLC, it becomes the property of a business entity. So, there’s a clear line between personal and business property. Its purpose is to keep records, prepare tax documents, and maintain liability status.

Enhancing the Business Image

After transferring a car title to your LLC, it will use it for business purposes.  As a result, it will become your LLC property and enhance your LLC’s professional image in the market.

Higher Insurance Coverage

There is a difference in insurance coverage for personal and business property. Commercial vehicle insurance coverage limits are higher. 

Business vehicles may encounter additional dangers, so their insurance premiums and coverage are naturally higher. It means that if your car gets into an accident, there won’t be any gaps in coverage.

Conclusion

Transferring a private vehicle to your LLC is legal. The process will be much easier if you meet all the legal steps and documents. Moreover, if a lender finances your car, it can be complex. But if they offer guidance, the process will be smooth. 

After transferring your car to the LLC, you may enjoy many benefits, especially tax deductions.

So, my answer to your question, “Can I transfer my financed car to my LLC?” is yes. But you should discuss this with your lender first and provide the necessary documents.

Lastly, you can lease the car title to your LLC instead of transferring it. Click here to read about how to lease your personal vehicle to your LLC.

Key Points

  • You can transfer your financed car title to your LLC legally.
  • Turn your business into an LLC and then transfer the car title to your LLC.
  • You may need to consult with your insurance agent to adjust the premiums.
  • Follow the formal process of title transfer and there is no need to pay sales tax on the car title transfer. Plus, you may also need to update all the records.
  • If your car is financed, then ask your lender first before taking steps to transfer the car title to your LLC.
  • You may also need to analyze your contract with the lender and submit all the required documents. You will receive a confirmation and then apply for the title modification at your local DMV office. Later, get the insurance for the car.
  • There are many benefits to transferring your financed car to the LLC. For instance, privacy, liability protection, tax deductions, higher insurance coverage, and more.

Frequently Asked Questions

Could I refinance my personal automobile for business use?

You can refinance your car for your LLC usage. It will save money for your LLC. If your LLC is older and financially stable, it can also refinance a vehicle. But you must maintain the legal documents and communicate with your lender first.

Can my LLC pay for my car loan?

Of course! But there is a condition. The LLC must use the car for business at least 50% of the time. Usually, there are 2 methods that you can use to determine the best usage. The 1st is the general depreciation system, and the 2nd is the straight line.

Max Smith - LLC Formation

He is a seasoned entrepreneur and legal expert at LLC Formation Hub. With a stellar track record in both business and law, Max simplifies the complexities of LLCs. His practical insights, featured on LLC Formation Hub, empower entrepreneurs across the USA. Max merges business finesse with legal acuity to guide businesses toward success.


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