I am the Managing Director of a company run by my son, this company he bought last September.
Now then, although I’m MD I’m only such because his credit was so bad the bank would not advance him the finance to buy the company, as a consequence I stood as MD and things went through OK as my credit rating is good.
To get back to my OP:
My sons credit rating is still piss poor and he wants to lease a car, his is knackered.
He can’t lease because of his poor history and he’s asked me to sign the papers.
Before I do I want to know if there is/are any penalties that could fall on me should he fail to maintain the monthly leasing payments or indeed if there any penalties at all that I could be liable for.
Seriously, if your son has had difficulties before, will he be able to meet the payments? I would imagine if you are signing the papers and he doesn’t make the payments, it will fall to you to make good (IANAL).
To me, it is absurdly obvious that if the son fails to make payments, then the father will have to make those payments. Therefore, I think that the father can’t possibly be asking about the payments. Rather, is must be that the father is asking about penalties (as indeed was the word he used twice).
In other words, if the son messes up and the lease gets transferred to the father, are there any penalties which he’ll have to pay for that transition?
No, it is I who seeks your forgiveness. I did not mean to be rude. The way you phrased it made me think you were asking something other than what you were really asking.
Eccles thinks if his grub arrives on time every time then he personally couldn’t give a shit who has to pay, he knows it isn’t gonna be him so why should he worry
It is indeed penalties that I’m asking about, not the failure to make monthly re-payments, should that happen I do believe the leasing company simply re-possess the car.
I just had a text message from the fruit of my loins, the leasing company is going to phone me around 4 o’clock.
I shall make all enquiries of them and make certain my arse is covered, if it aint then sproglet is out of luck
Yes, but you’ll still be on the hook for the payments missed before they repossess it. They won’t just come and take it away tomorrow if you miss a payment- they’ll let you keep it for at least a few months longer. Whatever payments (plus interest/penalties/late fees) accrue in the meantime will still be your problem.
Whoever signs the papers is risking the penalties associated with non-payment on a loan: Their credit history will reflect the late payments and eventually a repossession could happen and then be reported to credit reporting agencies.
I am not sure if by “signing the papers” you are basically signing as if the car was sure or just signing surety for your son.
Either way, the answer is obvious: you will be on the hook. If this was not the case, what does the dealer get in exchange for you signing, and what would the point of requiring you to sign? Their return on investment would still be completely reliant on your son, and they have already determined that is too risky. The whole idea behind this exercise is to find someone who is less of a risk to take responsibility if something goes south.
Not trying to sound snarky here, but why mention the company or your title in the OP? Are you considering leasing the car as a co-signer, or are you leasing under the company?
I got the phone call and as my son has arranged for the car to be leased in the companys name and as I’m the MD the bloke said yes I’m liable if anything goes wrong.
I’m not signing anything, so there.
You, my son, should have learned to handle your finances better, just like yer dear old dad told you many moons ago
It would appear you have already made what sounds like a sensible decision. There are indeed some hidden “penalties” and potential costs that go along with leasing. I personally like leasing as opposed to buying, but it is not for everyone.
Just in case, here are some items that may or may not have come up in your conversation with the leasing company:
Obviously late payments and collections fees have been covered in this thread.
Mileage charges. In the US, most leases are based on 10K, 12K or 15K miles per year. There is always a charge if the car comes back “over mileage”, and will be some number of cents per mile.
Excess wear and tear. Leases are based on the expectation that the lessee will take reasonable care of the vehicle. For example, on a three year lease, it is reasonable that there might be a couple of minor door dings and maybe some small paint scratches, and possibly a small stain or cigarette burn on the interior. But not things like major dents, broken lights, huge paint gaps, ripped up upholstery, multiple cigarette burns, or fenders attached to the car with bailing wire. The engine should be capable of performing like other cars of its type and age. Reasonable variations from pristine condition are not a problem. but anything that is going to require major costs to spruce up or fix is going to be passed on to you.
Insurance part 1. There are some hidden gotchas with insurance. First off, the lessee is expected to provide coverage, and in most US states, the coverage minimums are higher than those required if you own the car. This is to protect the lessor. While the car will be titled to the lessor, you/your son are the ones who need to make certain it is properly insured during the course of the lease, and at the required minimums. Check the lease contract and with your insurance agent for required minimums and potential penalties.
Insurance part 2. Gap coverage, the true hidden gotcha of leasing. In short: with “generic” car insurance, the insurance company may pay out the “value” of the vehicle instead of repair costs if the car is totaled. This “value” is going to be somewhere in the neighborhood of the current black book value of the car, and as such, is quite probably not going to equal the buyout value of the lease at the time the car was totaled. That figure will more or less be “agreed buyout residual+remaining payments+early termination penalty”. So there can be a “gap” between what the insurance will pay you and what is still owed on the lease. This is not hard to resolve, as most insurance companies will be willing to insert a gap coverage clause or otherwise include language that makes sure that you are covered to the value of the remainder of the lease rather than the value of the car. Or you can over pay the lease company for this type of gap coverage. Either of these ways this will cost a little as neither your insurance company or the leasing company is going to provide the coverage for free. But you need to have it, or you stand to be stuck with the “gap” payment in the event the car is totaled.
He’s trying to lease a car that he can’t afford to buy or get credit to buy, and the business also seems not to be able to afford to buy it. If he had learned finances, he would be living within his means, and would go out and find a used car that he/his business could afford to buy. Not leasing a fancy new vehicle.
And you, dad, should think about why you continue to enable him in his financial sprees. How many moons will it take you to learn to say “No”?
You’re quite right of course. He can’t afford a car because of his bad credit rating and because the company has only been trading for 7 months and even though it’s making money the leasing company are still hesitant to advance any sort of credit without yours truly putting pen to paper, which I’m not prepared to do.
My sprog has always been a bit of a dipstick when it comes to money, he’s the sort of bloke that spends without any thought, something I’ve warned him about time and time again.
I’ve bailed him out of so many messes of his own making that about 18 months ago I told him “That’s it, don’t ask me for any more”
Up until this recent escapade he’s not asked, it seems that he still hasn’t learned to walk before you run
