The answer is YES! Businessmen and women all around the world are becoming smarter and would want to do all that is legal to cut down on their expenses, and one of the ways people achieve this, especially in the United States of America, is to transfer their personal liability to their business.
Trust me, most business people choose to transfer their car loan to their business because most often than not, if the business is a small-scale business, the likelihood that the car is serving the business rather than the owner is high. For example, a business that is just starting out would require the presence of the owner in the day-to-day running of the business.
As a matter of fact, most entrepreneurs that are just starting out usually work round the clock and they do not take leave of absence or vacation. With that, you can safely say that their car is serving the business hence it is right to transfer the car loan to the business.
Steps to Transfer Your Car Loan to Your Business
If you have decided to transfer your car loan to your business, then here are the steps you should follow:
First Step: Talk to Your Lender
If you are considering transferring your car loan to your business, the first step you should take is to visit your lender and discuss it with them.
Trust me, most lenders have policies in place to protect their loans and their company. In some instances, the condition stated in the loan might not permit you to transfer the personal loan you took for your car to your business. They might not have the options for that, and if they do, they will tell you the implications.
Second Step: Fill the Form and Submit the Supporting Documents
If you have the clearance to go ahead to transfer your personal car loan to your business from your lender, then you should go ahead to fill out the form and submit the required supporting documents.
Some of the supporting documents you are expected to submit may include your business registration document, the business financial statement, and any other documents that will show that the business is capable of financing the loan and the business has a good credit rating.
So also, you will be required to complete a personal guarantee form. The purpose of the form is to ensure that if anything goes wrong, you will be held responsible.
Third Step: Wait for the Decision of the Lender
After filling out the form and submitting the required supporting documents, you will be required to wait for the decision of the lender.
As expected, they will review your application and the documents you submitted to see whether you qualify to transfer your car loan to your business or whether your business can finance the car loan. If they are satisfied, they will approve the application and if they are not satisfied, they will decline your application.
Pros of Transferring Your Car Loan to Your Business
Of course, you know that when a personal car loan is transferred to a business, the business bears responsibility for the car and the loan. This will help the entrepreneur to cut down on some of his personal expenses on the car hence enjoying some tax benefits.
Another benefit of transferring a car loan to your business is that it will also help protect you from personal liability. This means that if there is a lawsuit against you, your car will be treated as business liability and not your personal liability hence when a case goes against you in court, the car cannot be confiscated.
So, also, another benefit of transferring your car loan to your business is that you will be able to use the car as an asset or collateral to access a business loan. But note that this can only benefit you if you have good credit ratings and you have not defaulted in servicing your loan.
Cons of Transferring Your Car Loan to Your Business
One of the major disadvantages of transferring your car loan to your business is that it might affect your personal credit ratings. Some lenders might see you as playing smart and may not want to issue you a loan in the future or they may want to increase the interest rate when issuing you a personal loan.
Another disadvantage of transferring your car loan to your business is that it may likely affect your personal tax. Depending on the city or state you intend to transfer your car loan to your business, you will raise a red flag and that might affect your personal tax.
It is important to clearly state that the information stated in this article is not absolute and may not apply in your country or city hence we usually advise our readers to consult with a financial expert in their city, state, or country to help guide them on the decision to either transfer their personal car loan to their business and what the implications are as it relates to their personal finance and the status of the business.