Company Director in need of a personal loan

dsa1980

Hi Tixy,

Thanks for your help.
We need to get the loan before then, as the plan was to buy my Dad's car from him when his finance deal ends (as he owes way less than it's worth).
Sounds like it's a no go then.

Funny how when he was self-employed as a sole trader, with £20k credit card debt he had no problems getting loans and credit cards, now he has £0 debt and employs other people, meaning he has a more stable income (i.e. if he's sick or on holiday, he still gets money) he isn't credit-worthy!
Our banking system is most definitely messed up!

Thanks anyway.

Tixy

Not sure how long since he was self-employed but its become much harder to get credit in the last few years, and banks are much more cautious. Plus as a sole-trader he will simply have been asked for his profits figures - as this was all his own income.

I'd say the banking system is far less messed up than it used to be.

I thought you wanted to borrow to pay off the existing finance but keep the current car? is he planning on handing back his current financed car? if so can he not still do this and just buy a cheap car outright instead.
Or have you explored the possibility of the company buying a car for him instead - either your father's or a cheaper one. Obviously you need to weigh up the tax pros and cons of it being owned by the company (captial allowances against benefits in kind etc relative mileage between personal and business miles etc) but something to talk to your accountant about.

BoGoF

When he was a sole trader his taxable profit would have been considered his 'income' now his salary is what counts. Seems to me that a conscious decision was taken to change to a Ltd company to minimise tax/NIC but that has repercussions as you are finding.

dsa1980

BOGOF, you seem to have a real issue with this, merely posting to make comment on people you don't know, rather than providing any help, guidance or information.
He didn't become a ltd. company to pay less tax and NI, we did it to limit the liability, and claim on our home etc. should his business get into trouble and we were bankrupt. As I mentioned before, our accountant never explained that this would affect my husband's income, and being naive and not very business savvy at the time, we didn't think to ask. In fact, since being a ltd co. and employing other people, we're helping the government with providing people with a wage, and paying their National Insurance contributions as well as our own. At least we're not work dodgers claiming benefits, council houses etc.

BoGoF

I have no issue at all with it, just explaining why he's having difficulty getting a loan.

Perhaps your beef should be with your accountant who didn't explain the full implications

As an aside you don't need to be Ltd to employ people and pay their NIC.....

jonesMUFCforever

Can the Limited company not get a loan? Transfer the vehicle to the company.

dsa1980

That's an idea I hadn't thought of - thanks

I've just emailed our accountant to ask for advice, so I'll see what he thinks about this too. Thanks

BoGoF

jonesMUFCforever wrote: »

Can the Limited company not get a loan? Transfer the vehicle to the company.

The danger then is any private use of the company vehicle would attract a car benefit and possibly fuel charge.....

chanz4

The house security wouldnt work anyway, as you said its a commercial mortgage which would inturn belong to the business

iolanthe07

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