Recent Feedback
Hello, Our son wants to buy a car (he is 25, has a 6 mo old baby and just got out of the Navy, and is back in college.) He has been told he needs a co-signer to make the payments reasonable due to little or no credit history. He qualifies without help but the payment nearly triples per month.We own a company and he is a part-time employee. Could the company buy the car and lease it to him? He would pay the insurance and payments.If we do it through the company and there is an accident are we, as the company, liable for any lawsuits, etc?ORWe can just co-sign as individuals not involving the company.If we just do a co-sign for the car and he makes insurance and car payments and there is an accident what is our liability as co-signers? ORAny other suggestions or options?
Optional Information: Country relating to Question: United States State (if USA): Georgia Already Tried: Talked with the insurance company about liability and insurance coverage and our accountant regarding the tax consequence of the company buying the car and leasing it to our son.
Welcome and thank you for your question!Please clarify: what is the nature of your company's business? Are you in the car leasing business?
No, we would just buy the car under the company name and lease it to him. Our business has nothing to do with leasing or vehicles of any type.
Thank you. Under those circumstances, it would not be a legitimate business expense for the company to purchase the car and lease it to him. You could have IRS problems which, I'm sure, your accountant warned you of.If you are going to co-sign, do it individually. When he purchases insurance, make sure that he adds you as additional insureds on the policy.It has been my pleasure to assist you today with your information needs. It is my goal that you are satisfied. No expert can promise you an answer that is favorable to your circumstances. But I will do my very best to explain the legal principles that are related to the facts you’ve described so that you can better understand the “why” of things. What are your options now?If you wish to continue this conversation, click on the Continue Conversation link. If you are satisfied that I have answered your question, then please rate the answer with a four or a five so that I receive credit for assisting you. Positive ratings are the only way I receive credit for assisting you today.IF you feel the need to click either "Helped a little" or "I expected more," then do not rate me (not yet, anyway!). Instead, reply to me using the REPLY or CONTINUE CONVERSATION button. Specify what additional information you need and I will be happy to continue further and do everything I can to provide you with the service you seek. Thanks, ~~ J.B.
Experience: Explains legal matters based on 14+ years experience.
Sorry, I need a bit more help.
The insurance company specifically said NOT to put our son on our policy. Are you saying that we should or that we should be added to his insurance? According to the insurance agent, we make ourselves liable by being listed together.
Anybody there? Have I lost you?
Thank you for the follow-up. Sorry for the delay. I am happy to clarify. I did not suggest that you add him to your policy.I had suggested that he add you to his policy as an additional insured when he takes out insurance on the car.It has been my pleasure to assist you today with your information needs. It is my goal that you are satisfied. No expert can promise you an answer that is favorable to your circumstances. But I will do my very best to explain the legal principles that are related to the facts you’ve described so that you can better understand the “why” of things. What are your options now?If you wish to continue this conversation, click on the Continue Conversation link. If you are satisfied that I have answered your question, then please rate the answer with a four or a five so that I receive credit for assisting you. Positive ratings are the only way I receive credit for assisting you today.IF you feel the need to click either "Helped a little" or "I expected more," then do not rate me (not yet, anyway!). Instead, reply to me using the REPLY or CONTINUE CONVERSATION button. Specify what additional information you need and I will be happy to continue further and do everything I can to provide you with the service you seek. Thanks, ~~ J.B.
So regarding liability, if he adds us to his insurance policy that takes away our liability in case of an accident? My major concern is how much are we held responsible if we co-sign his car loan and he has an accident?
As a general matter, co-signing a loan only makes you financially responsible for the car in the even the stops paying.If your name appears on the title, depending upon the reason for the accident, a plaintiff may try to add your name to the lawsuit. With your named added to his policy, then you're insured to cover it.Why would you want your name added to the title/registration? Because if he stops making payments, you want to be able to go and take the car.I assure you that I assist all kinds of parents and grandparents whose kids/grandkids have stopped payments on car and student loans. You also want to have a separate written agreement/contract with him regarding payments so that you can sue him in event of a breach. If there's no contract on repayment, the car is considered to be a gift from you to him.Best wishes!
Thank you! That is the information I was looking for today.
You are very welcome. Best wishes!