financing question about owning leases
 

Im trying to get financing for a new boat this fall. Ive been turned down twice now because of my debt-to-income ration. Both checks and turndowns have brought my score down.. :mad:

Upon further investigation, the reason Im getting turned down is that the stuff that I own is paid for by my company. Both trucks, a house, a couple of trailers and some prperty and equipment. Ive made the mistake of buying the stuff immediately when I needed it for that particular job or whatever and then I have the girls in the office make the payments on it.. So basically its showing i spend quite a bit more than I make. How do I get around this? Do i need to claim that money they pay as additional income even though Ive not claimed it on my taxes?

I may end up going with private financing from an investor in my company but need to figure out my options first..

I just went through the same thing. I just bought a 2nd house...didn't want to tie it up so remorgaged my 1st house. They made me pay off everything! Didn't look at assets,what my business pays for, etc. This is part of the new restrictions on lending. I prequalified 5 months ago without a hitch. Everything changed in those 5 months!

PS I had almost twice in cash in the bank than I was borrowing!

I am a corp so anything I buy for the business is in the corporation name.Does not even show up on my credit.Might want to look into doing a Sub S corp

First and foremost, talk to an accountant. They can help you get set up the way that makes the most sense to you for taxes and your overall financial picture. I was in the same boat as you but here is what I did.

1. I converted by Sole Prop. to an LLC (mine is personally looked at as a C corp, some do S corp). To do this the right way is why you need an accountant. It can be confusing.
2. I sold all of my toys and debts to my newly formed corp. The debt no longer appeared on my name personally.
3. I started actually paying myself from the corporation a salary so I could establish income because the days of no doc loans and doing loans based solely on your credit score are no longer.

4. Keep your business and personal matter separate the best you can. I say that both from a financial and liability standpoint.

I hope this helps you a bit. Good luck.

what a PAIN!

totally is and TIME CONSUMING but it separates your liability which is what could wipe you out down the line... it's worth the pain ;)

Go back to both banks that you were turned down by and give them 3 months of checks for each business debt that is on your personal report. If the people that you were working with were "good at what they do" they would have asked you this question immediately.

The underwriters should then back out those debts which will reduce your DTI and you should be in the GREEN :drink:

To further the question on this, what is required to purchase a boat under a company name rather than on personal credit. My company currently owns my truck and makes payments on it 9and has for about a year). Could a boat loan be made to the company?

Nope - The loan needs to be approved personally (on your credit) and then can be put into a company name (most banks want a shell co. not a working corp.) but the credit remains tied to your SS#. Your company can make the payments but that is about it.