Results 1 to 9 of 9

Thread: New business - first vehicle - financing options

  1. #1
    Junior Member
    Join Date
    Aug 2013
    Location
    FAIRFAX, VA
    Posts
    8

    Default New business - first vehicle - financing options

    Hello all,

    mine is a new business just getting started. I now plan to buy one or two vehicles say a used LTC and used Suburban to start with. I have my LLC and have approached couple of traditional banks for financing the vehicles and i see the reluctance.

    So in this situation can I buy the vehicles in my personal name with regular consumer auto loan and then LEASE the vehicles to my own company for business use ? will this be a problem for the livery insurance? I am thinking the banks/auto dealers may not have any objections to this mode of obtaining/financing the vehicles.

    Please advise.
    Thank you all for taking time to respond.

    EDL

  2. #2
    Senior Member
    Join Date
    Sep 2008
    Location
    Kansas City Metro Area
    Posts
    2,668

    Default

    Quote Originally Posted by EDL View Post
    Hello all,mine is a new business just getting started. I now plan to buy one or two vehicles say a used LTC and used Suburban to start with. I have my LLC and have approached couple of traditional banks for financing the vehicles and i see the reluctance. So in this situation can I buy the vehicles in my personal name with regular consumer auto loan and then LEASE the vehicles to my own company for business use ? will this be a problem for the livery insurance? I am thinking the banks/auto dealers may not have any objections to this mode of obtaining/financing the vehicles.Please advise. Thank you all for taking time to respond.EDL
    Go ahead and put them in your business name. You are going to have to personally guarantee the loans regardless of which way you go.
    Tim Wiegman, Jr.
    Boulevard Limousine
    Travel Confidently!
    Serving Kansas City, Lawrence, Topeka
    http://www.BoulevardLimoKC.com - Kansas City Limos
    KC Airport Car Service

  3. #3
    Junior Member
    Join Date
    Aug 2013
    Location
    FAIRFAX, VA
    Posts
    8

    Default

    Thank you for the response. So the reluctance on the bank's part was due to the fact there is no gurantor for the loan?
    I was thinking in either case my credit history would be considered and the loan is a secured loan (with the vehicles being considered as colaterral).

    I am contacting a couple of other sources next week and will decide on a direction.

    but the general sense I am getting is it does not matter which way I go. But guess if the loan is in the business name then the business credit worthiness is established, which is a good thing in the longer term.

  4. #4

    Default

    You will never be able to obtain a loan with the business' credit alone unless the business has a board of directors and is able to survive your absence for whatever reason.

    Your only option is to buy the cars in your name and lease them to your business. I've never had a problem in the least with this arrangement.

    If I were you, I would start with the LTC and hold off on the second car until you knew that you will be able to optimize the use of both. The insurance is going to kill you if your cars aren't both running consistently at first. Find another small operator that maybe just has a SUV. See how much work you really will be able to generate and book with the SUV. If you are booking enough to buy your own over a few months, do it.
    Andrew Armitage
    Vintage Chauffeuring LLC
    Andrew@VintageChauffeuring.com
    www.VintageChauffeuring.com

  5. #5

    Default

    Is insurance really that expensive for one or two cars?

  6. #6

    Default

    For a new business, yes. There a lot of factors, including how many drivers will be on the policy, the number and type of vehicles, the value of the vehicles, and the area in which you are in operation. Which is why most people on this forum are reluctant to talk actual numbers. But it will be several thousand dollars per vehicle per year and may be required up front. If you don't have the cash on hand, you will have to find a third party to finance the insurance.

    There are others on this forum that can probably answer better and no one can answer better than an actual insurance agent that you consult with.
    Andrew Armitage
    Vintage Chauffeuring LLC
    Andrew@VintageChauffeuring.com
    www.VintageChauffeuring.com

  7. #7
    Senior Member
    Join Date
    Sep 2008
    Location
    Kansas City Metro Area
    Posts
    2,668

    Default

    Quote Originally Posted by LoneLimo View Post
    Is insurance really that expensive for one or two cars?
    Insurance on my first vehicle my first year was $6,000. I had no loss history for them to use for the underwriting so they go in. It has since come down over time, but it is still several thousand per car. I know in the New York area that they can be in the neighborhood of $10k per vehicle for an established business. The range can vary widely.
    Tim Wiegman, Jr.
    Boulevard Limousine
    Travel Confidently!
    Serving Kansas City, Lawrence, Topeka
    http://www.BoulevardLimoKC.com - Kansas City Limos
    KC Airport Car Service

  8. #8
    Senior Member
    Join Date
    Sep 2008
    Location
    Kansas City Metro Area
    Posts
    2,668

    Default

    As far as which way is the best to register and lease the vehicles, whether you want to buy them n your name and lease them to the company or buy them in the company name, I suggest spending a couple hundred dollars and asking a lawyer. If one of your vehicles is involved in a incident and the vehicles in your name, it can easily pierce the corporate veil of protection and they can come after you. Again, for a matter like this I suggest contacting a lawyer and not relying 100% on the information you get from a free public forum.
    Tim Wiegman, Jr.
    Boulevard Limousine
    Travel Confidently!
    Serving Kansas City, Lawrence, Topeka
    http://www.BoulevardLimoKC.com - Kansas City Limos
    KC Airport Car Service

  9. #9
    Member
    Join Date
    Aug 2013
    Location
    New Bedford, MA
    Posts
    72

    Default

    I'm a new company myself, running 2 vehicles: a Turtle Top van with stable revenue from a commuter service and a Lincoln stretch. I fought and fought and battled for reasonable insurance rates. Understanding and accepting the fact that commericial rates will be higher, I wouldn't accept a $10k policy per vehicle. From an insurance standpoint, I don't have a "fleet" of 5 or more vehicles, so they aren't going to retire with my premium.

    Don't give up, search and search around, and request a volunteer policy vice ceded. In the end, I'm paying $3500 for the van and $3000 for the limousine. Each have $1.5M in coverage.
    Ryan Lord
    Signature Limousine Company
    New Bedford, MA
    SignatureLimo@comcast.net
    www.signaturelimocompany.com

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •