Guarantor versus Co-signer

Business owners have a lot to worry about. Insurance, payroll, supplies, schedules, whether someone bought coffee, the list never stops. Acquiring vehicles for themselves and employees to get the work done is just one item on the list.

Moving right past the basic question of what vehicle will be best suited for the work at hand, is how to acquire the vehicle.

Also, assuming you have talked to your accountant about whether leasing or purchasing is the best option for you and your business write offs, let’s talk credit. How do you build business credit and not mount up personal debt at the same time? We consult many businesses who are instructed by dealerships that they also need their personal name on the paperwork, or worse yet, only in the company owner’s name.

The difference is being a guarantor, versus being a co-signer.

There is a basic difference between between being a guarantor versus being a co-signer. There can, however, be dramatic differences in how it affects you, and these small differences can be paperwork changes that can protect your personal assets.

Option one: be a co-signer. Most people are more familiar with this option; whether a parent co-signed on a loan when we were young to help us build credit, or as a couple and both signing for a household vehicle. Different states have different laws on how this is viewed, so make sure you know your rights and laws. This simply put, means two names are printed on the paperwork, and both parties sign for the vehicle. In the case of a business, a co-applicant is an officer of the company and has their personal name and credit information tied to the loan on all of the paperwork.

Option two: be a guarantor. This is when an officer of the company who is looking to build the company’s credit adds their personal information on the loan application, but their name stays off the title and registration. The ultimate goal is to build the company’s credit enough to stand on it’s own, without the financial assistance of the officers of the company. This takes time and risk. So, to make it easier and less risky for business owners, banks offer the option to be a guarantor.

The application process itself is typically the same between a co-signer and guarantor. The company would supply the business info, federal tax identification number, an officer’s information and social security number of the officer. This officer’s information will establish the basis for the loan approval. Much like a young adult may turn to a family member to co-sign for a loan to start building their own credit, a young business will need the same help to get started. The advantage here is that businesses have the option to be a guarantor.

The advantage to the company officer as a guarantor is that the debt does not show up on their personal credit. The credit inquiry from the bank will appear, but the monthly payments and total debt owed will remain off of their personal credit. The exceptions to this vary from bank to bank, but unless there are late payments or the loan defaults, it will stay off of the officer’s credit.

Example: A business has 5 trucks or equipment loans that a business owner is a guarantor on, and the business owner has two personal vehicles with loans. The personal credit report will not show 7 loans, it will only show the two loans on their personal vehicles.

Each bank will have documents that the business officer will need to sign acknowledging that they understand payments will need to be made even if the company dissolves or stops making payments.

The other advantage is personal liability. If a personal name is on the registration and title of the vehicle, or equipment, then that person is equally liable for that equipment. Therefore, if the vehicle is in an accident, and deemed to be at fault by a company driver, that company and any person on the title are open to litigation directly. It is much more difficult for lawyers to target officers of a company if their names are not directly on the titles of the vehicles in this example.

Always consult your accountants, insurance agents, and seek legal counsel on how to best protect you and your company before making decisions. Since laws, and what is available vary from state to state it is always best to make sure you know your options before it is too late. No one wants to see business owners work so hard to build their business from scratch all to lose it over some simple paperwork changes.

Let’s Go Glamping!

We sell a lot of vans to folks all over the country. One of the trends that I love seeing are the growing market of people taking cargo vans and turning them into mini-camper vans. This market surprised me when I started in the car business nearly 21 years ago. Back then we had requests a couple times a year. Now we sell them a few times a month.

These requests used to be on larger vans only. Now we get them on our smallest ProMaster City vans all the way through the ProMaster van line-up. So, whether you need 6, 8, 10, 12, or 13 feet of deck space, we have you covered.

The ProMaster City vans have 4 models. There is a City Tradesman Wagon or a SLT Wagon. Both of the Wagon models have 5 seats, and 54.7 inches of deck length behind the rear seats. 69.2 inches if the back seats are folded forward. With the 2.4L Tigershark motor and the 9-speed automatic they get great fuel economy and have lots of power without having to worry about turbos or premium fuel. They are also best in class with 1,885 lbs of payload, and 2,000 lbs of towing capacity when properly equipped. I’m 6′ 2″ and they have more than enough head room.

So, for a “small” van there is plenty of capability for camping and searching the countryside, and room for the camping gear, kids, dogs, and a partridge in a pear tree. Beep Beep!

Then, when you move up the size lineup to the full-size ProMasters line, they start with the 118 inch wheelbase. Here is a short video I made showing one off with the swivel seats.

2019 RAM ProMaster 118 WB with swivel seats.
Let’s Go Glamping!

The swivel seats are a popular choice for camper vans. So, when you are stopped you have chairs that can spin 180 degrees and face the rest of your van. No, we do not recommend doing this while driving. Even if you think you’re Tow Mater and the world’s best backwards driver. They still recline and have full adjustments. These seats are available as a factory options on all of the full size ProMaster vans, but must be added at the factory. They, unfortunately, cannot be retrofitted.

The 118 inch wheel base has 8 feet of deck space (behind the front seats to the rear doors). The 136 inch wheel base has 10 feet of deck space. The 159 inch wheelbase has 12 feet of deck space. While the longest van we make is the 159 inch wheelbase extended and that has 13 feet of deck space. There are two different roof heights with interior heights of 5 foot 5 inches or the high roof vans are 6 foot 4 inches. For more specific dimensions and helpful tips the RAM engineers made this website to walk through each vehicle. (works best with Internet Explorer)

Each size can be configured into a tiny house on wheels.

Beep beep. Hit the road and see the country, or as many of our clients have done, countries. Road trek and Winnebago take our ProMaster vans and make full camper vans. Most of those are well over $100,000 USD. Cha-ching! So, it is understandable that there are many folks that are handy enough to make their own versions for much less. We have seen dirt bikers add fold up beds into the walls, and people just hanging hammocks inside the vans.

It has been fun to see all of the variations that people have come up with over the years. Some folks have the van as a work van and haul around padding to throw on the floor and a sleeping bag to go camping on the weekends. The weekend warriors are my people. There are those folks that would rather go out and buy the turnkey ready Winnebago version, but I admire the crafty people that can manage to fight off cursing, wipe up the blood stains, and deal with the agony of cutting the trim piece too short. The victory of putting together a completed van that is yours.

Sometimes we just want to get away, and reset ourselves.