Connect with us

Bad Credit

Ultimate Guide on How to Get a Business Loan

Published

on

The right type of small business loan may be all you need to launch a new venture or grow an existing business, but deciding what kind of loan is right for you isn’t always a simple task. Understanding how business loans work and what options are available to you will help you determine which one you should pursue to get the working capital you need.

What is a small business loan?

Put simply, a small business loan is a type of financing offered to a company by a lender or provider. In exchange for capital, lenders charge interest and fees and require businesses to repay the principal on a set schedule over a standard period of time. However, repayment terms, interest rates and fees vary greatly depending on the type of business loan you take, who the lender is and various other criteria, such as your credit history, years in business and existing debt.

What to consider before applying for a business loan

What you need a loan for

Before applying for a business loan, you need to prepare a detailed business plan that explains how you will use extra capital to fund your business. Identify your specific business goals for the money, such as expanding into new markets, improving a product or service, growing your team, opening a new location, or simply having a safety cushion.

When to apply for a loan

The best time to apply for a business loan is when your company needs capital and, more importantly, you meet or exceed the minimum qualification. Lenders generally consider the following criteria: 

  • Credit score: First and foremost, lenders will evaluate your business and personal credit history and determine your level of risk. Lenders look for borrowers with a credit score above 680, though the exact minimum score is based on various other factors, such as your industry and the current economic trend.
  • Years in business: Most lenders require borrowers to have been in business for at least one year. Depending on the lender, the type of loan and the amount you want to borrow, you may need to have been in business for at least two years to qualify for a small business loan.
  • Annual revenue: Most traditional lenders require you to have a minimum annual revenue, usually between $50,000 and $250,000. Microlenders, on the other hand, may offer short-term loans as low as $2,500. Before applying for a loan with any lender, make sure your business exceeds their revenue threshold.
  • Ability to make payments: Finally, lenders will consider your ability to make payments. Carefully go over your business financials and make sure you have enough cash flow to make your repayments on time.

Amount of money you need

When you meet with potential lenders, make sure you have a specific amount of money you’d like to borrow. Make sure this number reflects the real amount you need to achieve your goals and that you have the ability to pay it off.

Types of lenders

When most people think of a lender, they think of traditional types, such as banks, credit unions and financial companies. However, there are other types of business financing that you can use to fund your business, such as these alternative lenders:

Loan terms

As you weigh different lending options, consider each institution’s loan terms, or the total amount of time the loan will last if you make the minimum payment each month. Also, look for any additional terms and conditions listed under the loan terms. Loan terms vary by the type of lender and loan, from a few months to several years.

Repayment

In most cases, you are expected to pay back a business loan over the term of the loan with a regular monthly payment. The amount you pay with each installment depends on the amount you borrowed, the type of loan and lender, your credit history, etc. Failure to repay a loan is known as a default, and it can have steep consequences for a business’s creditworthiness.

Interest

With a traditional business loan, the lender provides capital to a business, and the business repays the amount borrowed, with interest, over the loan term. Interest rates constantly fluctuate depending on the current economy, and they also depend on the type of loan you want, the type of lender, and qualifying factors such as your credit history.

Types of small business loans

There are many different types of loans and lenders, and deciphering the differences between them can be tricky. If you’re considering a loan and you don’t know where to start, this guide will help you determine what type of small business loan is right for you.

Small business line of credit

A business line of credit is a common financing option for small businesses that works kind of like a credit card. You can borrow money up to a certain amount and pay interest on the funds you borrow. As long as you don’t go over your credit limit, you can borrow funds and repay as often as you need. 

A line of credit is ideal for businesses that require short-term capital to take advantage of a growth opportunity, bridge a gap, offset seasonal fluctuations in cash flow or meet an unexpected need.

Invoice factoring (or invoice financing)

Invoice factoring (also known as accounts receivable financing, invoice financing or factoring) is the process of selling your outstanding invoices to a lender, also known as a factor, in exchange for an immediate advance on the money your clients and customers already owe you. Companies often use factoring to improve their cash flow and secure funds on invoices. 

Factoring invoices is ideal for businesses with longer receivable payment terms, usually between 30 and 60 days. If you would like to improve your company’s cash flow, factoring is a good method to receive your money faster.

Asset-based loan

An asset-based loan is designed to help businesses secure financing based on collateral, such as inventory or accounts receivable. These loans are generally easier to qualify for, and businesses gain quick access to capital to reduce or eliminate short-term financial needs. 

This type of loan is ideal for companies that need capital to keep normal business activities running and can use their own assets as collateral.

Small business term loans

A small business term loan is a type of short-term financing that is usually intended to fill one specific need to help your business grow. For example, if you need to upgrade your equipment, hire additional employees or expand to a new location, a term loan can bridge the financial gap to get you there. As the name suggests, this type of loan has a fixed term, ranging from a few months to several years. 

This type of loan is ideal for business owners who need upfront cash to fill a financial gap to complete a specific task, such as hiring seasonal staff or opening a new location.

Merchant cash advance

Also known as a business cash advance, this type of loan is funded from a provider based on a business’s future credit card sales. You are required to repay the advance with interest based on a percentage of your credit card sales until it is paid in full. Because a merchant cash advance is paid through a percentage of your credit card receivables, there is no set payment term. Rather, your ability to repay the advance depends on how many credit card sales you make. 

A merchant cash advance is ideal for businesses that rely heavily on credit card transactions, such as retail storefronts and restaurants. This type of loan also doesn’t require you to have an excellent credit score or make manual payments to repay the advance.

SBA loans

An SBA loan can be used for virtually any purpose. It’s a long-term, low-interest small business loan that is partially guaranteed by the government, specifically the U.S. Small Business Administration. While the SBA does not loan the money itself, it does reduce the risk for the lender. SBA loans are sometimes more difficult to qualify for than other types of loans, and if a business does qualify, it can take several weeks to go through the approval process and receive funds. 

An SBA loan is ideal for small businesses that have been in business for at least two years, have a good credit score and have exhausted other financing options.

Business loan options and practices to avoid

Today, there are a plethora of alternative lenders and funding options that can get you the capital you need to grow your business. However, not all funding options are created equal. 

While traditional lenders tend to have strict requirements and can be difficult to qualify for, they are established and trusted entities that ultimately want your business venture to succeed. In many cases, if your business qualifies for a traditional loan, it makes sense to choose this funding method. 

If your business does not qualify with a traditional lender, alternative lenders and clever financing options can fund your business, but you have to be careful. Here are some alternative financing options and what to avoid: 

  • Business credit cards: There are many reasons why your business should get a credit card, so long as you use it properly and sparingly. A business credit card can help you build business credit and doesn’t require collateral (something new or young businesses may not have). However, if you use it incorrectly, you can hurt your credit score and quickly accrue more debt – and fees – than you can afford. A business credit card can help your business grow, but it can also sink it.
  • Invoice factoring: Like a business credit card, invoice factoring is a great solution for certain businesses in specific situations. Factoring has many benefits – it has a fast application process, it mitigates cash flow problems, and factoring companies can even help you with the collections process. However, interest fees can add up quickly, and if a customer doesn’t pay, you may be on the hook to repay the advance.
  • Merchant cash advance: If your business receives regular payment through credit cards (such as if you run a restaurant), a merchant cash advance can provide you with fast funding with no monthly installments or collateral, even if you don’t have a solid credit score. However, merchant cash advances are one of the most expensive forms of business financing; you’ll probably save money with a different lending source.

Small business loan requirements

Regardless of which business loan you pursue, the requirements to qualify and get approved are often similar. Here are some of the requirements you can expect.

Personal and business credit scores

If your business has a credit history, some types of loans will require lenders to run a credit check on the business. If your business has an excellent credit history, you will have an easier time getting approved. Additionally, the cost of borrowing money will be lower, and your likelihood of securing favorable repayment terms will increase. 

If your business doesn’t have a credit history, lenders will check your personal credit score and secure a personal guarantee that you will pay back the debt with your personal assets if the business fails to make a payment. 

Often, the best way to secure a loan is to build a strong personal and business credit score. Many lenders will take both into account when determining whether to extend financing to your business and on what terms.

Credit reports

In addition to your credit score, lenders will look at your credit reports to see if you have any missed payments, bankruptcies, foreclosures or accounts in collections. If your credit score isn’t as high as you’d like but your credit report doesn’t have any red flags, you may still be able to secure a loan.

Time in business

Many lenders are cautious about providing certain types of loans to newer businesses, as they don’t have an indicator of how risky their investment in the young business will be. Many types of business loans, such as SBA loans and business lines of credit, require a company to have been in business for at least two years. Other types of financing, such as merchant cash advances and invoice factoring, are more available to younger businesses.

Business finances and collateral

Many lenders require detailed information about your financial situation and will ask for cash flow statements, profit and loss statements, future projections, and other financial statements. The stronger your business finances are, the more likely you are to be approved for a business loan. 

Many types of business loans require collateral, especially if the lender determines the business is risky. A lender will usually look for a physical asset as collateral, such as equipment, inventory or real estate.

Cash flow and annual revenue

Lenders will look at your annual revenue and cash flow to determine whether you will be able to repay a loan on time. Even if you have an excellent credit score and have been in business for several years, if a lender doesn’t think you can afford the repayment terms, they won’t provide capital.

Loan amount

Finally, business lenders will consider how much money you are asking for and determine the risk. If you are a new business or have a subpar credit score, you may be approved for much less than what you hoped for. However, getting your foot in the door with a smaller loan is often an excellent opportunity to prove your creditworthiness and build a strong relationship with the lender. 

Generally speaking, you don’t have to worry about asking for more than what you actually qualify for. Business lenders want to work with companies, so they will often provide a counteroffer for a smaller amount to do business with you. Keep your expectations reasonable, but don’t stress about asking for too much.

How to apply for a business loan

Applying for a business loan is a daunting prospect, but it can be very straightforward if you have all the proper documents prepared and you apply when your business qualifies for the loan.

What documents do you need?

The specific documents you need for a loan depend on the type of loan and the specific lender, but these are the most common forms you’ll generally need: 

  1. Business plan: Many lenders don’t require a copy of your business plan, but it’s still best practice to have a detailed business plan ready. The business plan should include your plans to borrow a specific amount of money, how it will be used and how you will repay the loan.
  2. Bank and financial statements: One of the most important sets of documents to prepare for a lender is your bank and financial statements. Lenders want to know how much money is deposited and withdrawn from your bank account each month and how your money is being used. Your financial statements should include your balance sheet, profit and loss statement, cash flow statement, and any other specific form they ask for.
  3. Tax returns: For pass-through entities, such as sole proprietorships and partnerships, you will need to provide your personal tax returns. If your business files a tax return, you will have to provide this return as well.
  4. Employer Identification Number: Your EIN is a nine-digit number assigned to you by the IRS, also known as a Federal Employer Identification Number or Federal Tax Identification Number. Many banks require an EIN to open a business bank account.
  5. Proof of collateral: If you have to provide collateral to secure a loan, you will need to provide proof that you own something of sufficient value, such as real estate, inventory or equipment.

Submitting a loan application

Once you have gathered all the required forms and documents, you may be tempted to apply for and submit several loan applications at the same time. However, it’s best to choose your lender carefully and submit one application at a time. As with a personal loan, submitting several business loan applications at the same time can have a negative impact on your credit score.

How to increase the odds of a small business loan approval

Getting approved for a small business loan is difficult but possible. Here are a couple of basic steps to improve your chances of receiving a business loan.

1. Improve your credit score.

While not every loan involves an extensive credit check, many do. The best and most likely way to get approved for a business loan is to diligently improve your credit. Bad credit makes it harder to secure a loan and then makes borrowing money more expensive when you reach that point. Make sure your business is registered with the three big business credit reporting agencies – Dun & Bradstreet, Experian, and Equifax – on their respective websites to officially establish and track your business credit. 

If you apply for a certain amount and the lender gives you a lower counteroffer, consider taking the offer to establish a relationship with the lender. Be prudent with any business credit card or line of credit expenses, and pay off any debt as quickly as possible.

2. Provide a personal financial summary.

Before you speak with a lender, prepare documentation of all your personal financials, including all assets that may be used as collateral, such as real estate, vehicles and investments. Also make sure to prove all information regarding liabilities, such as mortgages, loans and credit card debt. Be as upfront as possible about your liabilities.

Know your small business loan options

Getting approved for a small business loan takes time and research. Before you pursue a loan, make sure you have a strong understanding of your business, your industry and what type of financing you qualify for.

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Bad Credit

AROUND OREGON: A financial lifeline during Covid

Published

on

The economic downturn caused by the pandemic has hit Indian Country particularly hard. Entrepreneurs are turning to small, local lending institutions in a region that’s often outside the reach of traditional banks.

Clients of Roxanne Best take part in one of her paddleboard yoga classes on the Okanogan River. (Courtesy/ Underscore)

Roxanne Best was preparing to relaunch her photography business when Covid made its way to the U.S. A serial entrepreneur and member of the Confederated Tribes of the Colville Reservation, Best teaches paddleboard yoga classes and artist-in-business workshops. She also taught “Indianpreneur” classes, the term used by an Oregon nonprofit for its business workshops. To put the photo enterprise back on its feet, she purchased marketing materials and scheduled events to showcase her product to clients.

“Then the pandemic hit and all the gigs I was scheduled for were canceled,” Best said in a telephone interview from her home 40 miles south of the Canadian border. “The income I was expecting was gone.”

Best went from helping other entrepreneurs get started to needing assistance herself. So she turned to the Northwest Native Development Fund, a community development financial institution based in Coulee Dam in north-central Washington state. Known as a CDFI, the fund is a private financial institution that delivers affordable lending to help low-income, low-wealth, and other disadvantaged people and communities. CDFIs mostly focus on specific communities or regions and provide funding and other services to encourage economic development and economic security.

The funds are nothing new — the Northwest Native Development Fund has been around for more than a decade. But the funds have been a lifeline to entrepreneurs who don’t have access to connections with traditional lines of credit during the economic downturn caused by the pandemic. Indian Country, and businesses in the arts, entertainment, and recreation, have taken a hard hit during the pandemic, according to a report by the Federal Reserve Bank of Minneapolis’ Center for Indian Country Development.

Many reservation residents in the Pacific Northwest “don’t have an ATM on their land, let alone a full-service bank,” said Amber Shulz-Oliver, a Yakama-Wasco descendant who is the executive director at the Affiliated Tribes of Northwest Indians – Economic Development Corporation. “Many don’t have collateral like a house or a rich uncle to borrow $10,000. CDFIs can be an institution that is trusted to get that kind of capital to build businesses.”

The battle to end predatory lending

Ted Piccolo, executive director and creator of the Northwest Native Development Fund based on the Colville Indian Reservation, is considered the region’s CDFI guru.

NNDF, which Piccolo founded 13 years ago, has lending capital of about $5 million. He would like to double that war chest by the end of the year.

“If we had to, if people came to the door, we could deploy close to $8 million tomorrow with the money on hand,” he said, noting that total would include loans already out.

The fund opened its doors in 2009 with classes, workshops, and small business planning.

“I was looking for ways to get some of our Native-owned businesses financing who couldn’t get traditional financing,” said Piccolo, a member of the Colville Tribe. “They were stuck in the water, on the sidelines.”

NNDF became a quasi-business consultant, educating business owners about the financing process and the need for good credit. Toward that credit goal, NNDF initiated an “anti-payday loan” program.

“One of the reasons for bad credit was people getting into all this high-risk stuff, super expensive predatory sinkholes that they couldn’t get out of,” Piccolo said.

People were trapped in a system that operated to keep borrowers in debt. Piccolo said predatory lending practices that include the principle, interest, and fees, can reach 200 or 300 percent, and create an exponential and unending debt.

Instead, NNDF offers a loan product that allows an individual to pay off a hypothetical $1,500 loan over 12 months with an interest rate of 15%, building new credit as he or she pays off the loan.

Borrowers are incentivized to pay off their advances with the promise of better interest — as low as 10 percent — on ensuing loans.

As envisioned, borrowers will pay off their NNDF loans and build enough beginning credit to obtain further credit through more traditional banks or credit unions. On top of providing loans, the fund offers counseling to help clients build business and marketing plans. Staffers hold family budget workshops, and in 2019 the fund financed the construction of a house to address a shortage of homes in the region.

Economic development means a robust private sector

CDFIs serving Native American communities give an economic boost for the entire region, Shulz-Oliver said.

“One of the big tools of economic development is a robust private sector, but small businesses need capital,” she said.

Piccolo said the biggest challenge for CDFIs in Indian Country is “human capacity” to operate the financial institutions.

“Out here on the reservation there just are not a lot of loan officers, accountants or controllers,” Piccolo said. “We need to train them and pay them, and still operate at the same time. We’re all learning on the fly, learning how to train while raising money to train and lend.”

And while CDFIs aren’t new — there are at least 1,000 of them, 70 of which serve Native communities, across the country — they’re growing. A 15-member Northwest Native Lending Network of developing or operating CDFIs was organized in 2019 at the Economic Summit for the Affiliated Tribes of Northwest Indians – Economic Development Corporation. The Northwest’s newest CDFI is the Nixyaawii Community Financial Services serving the Confederated Tribes of the Umatilla Indian Reservation in northeastern Oregon.

In the Northwest region, many Native CDFIs’ business portfolios consist primarily of natural resource-based ventures, with loans for logging equipment and fishing boats. However, CDFIs work with all kinds of clients, including a software company trying to get off the ground with help from ATNI’s Economic Development Corporation. The goal of these institutions is to help clients reach financial stability so they no longer need the CDFIs’ services.

“We’re trying to put ourselves out of business, to make individuals credit worthy enough” to access more traditional funding sources, Shulz-Oliver said.

Loan provided needed boost

Best provides training and teaches her yoga classes, but her bread-and-butter is portrait photography, especially photos for high school seniors.

More than a year after the pandemic hit the U.S., Best is still in business, eying senior portraits and the paddleboard yoga season. Best said the NNDF loan provided cash flow that carried her through the initial shock of the economic slump.

“That $5,000 is all it took to get out of the stressed-out mindset,” she said. “Now the bills are paid. You’ve got a good month or two to figure out how to make things work. That one little loan transformed the direction I was able to grow with my businesses.”

This story published with permission as part of the AP Storyshare system. Salem Reporter is a contributor to this network of Oregon news outlets.

BE PART OF OUR TEAM FOR SALEM’S BENEFIT: Accurate local information is vital for any community and that’s harder to come by in this day of “anyone can post anything” to social media. People in communities without trained journalists working for them don’t have accurate, trusted information. Help Salem avoid that fate – join in putting fuel in the tank of Salem Reporter to keep it growing, going strong. Here’s how:

SUBSCRIBE: A monthly digital subscription starts at $5 a month.

GIFT: Give someone you know a subscription.

ONE-TIME PAYMENT: Contribute any amount and you support giving the people of Salem local news otherwise missing. (You can also mail your contribution: Salem Reporter, 72585 Middle Fork Lane, Bates OR 97817)



Source link

Continue Reading

Bad Credit

Why Are Certified Pre-Owned Cars More Expensive?

Published

on

The used car vs. certified pre-owned (CPO) argument can typically be summed up with the phrase “you get what you pay for.” Both are technically used vehicles, but CPO cars have a few advantages that may be worth their price tag.

Why CPOs Cost More Than Regular Used Cars

A CPO vehicle is commonly called the cream of the crop of used cars, and its price tag often reflects this. CPO vehicles tend to be more expensive than standard used ones.

But, why?

One of the biggest reasons why CPO cars are more expensive than their used counterparts is that CPOs are inspected by a manufacturer-certified mechanic. This means that every CPO vehicle must meet certain standards before it’s labeled as such. A true CPO is sold at a franchised dealership. Mom-and-pop dealers don’t have these vehicle options (and “dealer-certified” is not the same thing as a manufacturer-certified car).

Another reason for the higher price tag is that many CPO vehicles have just come off-lease. When a lessee returns a lease, the manufacturer’s likely to inspect to see if it qualifies for their CPO program. Since most auto lease terms are around two to three years, many off-lease cars make the cut when they’re returned clean and meet the low-mileage requirements. CPO cars are also refurbished, unlike regular used vehicles.

Each auto manufacturer has its own set of standards for their CPO cars, but the guidelines are usually in this ballpark:

  • Vehicles typically must have less than 80,000 miles
  • Some luxury brands require less than 50,000 miles
  • Typically must be less than ten years old, sometimes newer
  • Only one previous owner

Regular used cars don’t go through these rigorous manufacturer inspections before they’re sold. A used vehicle may be inspected in-house at the dealership before it’s sold, but likely not through the manufacturer like a CPO.

CPOs Are Covered

All CPO vehicles come with some sort of warranty, which adds to the overall cost, but offers peace of mind. Being on the newer side, many CPO cars may still be covered under their original manufacturer’s warranty and often include an extended warranty once that expires.

Some perks manufacturers may include in their CPO warranties include:

  • Why Are Certified Pre-Owned Vehicles More Expensive?12-months of 24-hour roadside assistance
  • A 12-month warranty after the manufacturer’s warranty expires
  • A vehicle history report
  • Powertrain coverage
  • Car rental coverage
  • Trip interruption benefits

Of course, manufacturers vary in what their warranties include when you purchase a CPO vehicle. Be sure to read through the exclusions of the warranty so you know what the terms are, how long you’re covered, and if there are any limitations.

Can Bad Credit Borrowers Finance a CPO?

Generally, bad credit borrowers are told to finance a used vehicle over a brand new one because used cars come with a lower sticker price, usually. However, while CPO vehicles tend to be a little more expensive than regular used vehicles, a CPO’s selling price is still likely less than a new car due to initial depreciation. Depreciation is loss of value over time due to mileage, age, and normal wear and tear.

Brand new vehicles lose a lot of value in the first two or three years of ownership, possibly up to 20% in that time, and it’s usually the steepest drop in value over the life of the vehicle. However, after those first couple of years, depreciation tends to slow down. If you opt for a CPO car, it’s usually much less expensive than its brand new equivalent, and very likely has already seen its steepest drop in value.

A CPO car is likely a more attainable option for bad credit borrowers than a brand new one. And if a borrower with credit challenges works with a special finance dealership that’s signed up with subprime lenders, CPO vehicles can be an option if they meet lender requirements.

Ready to Stop Looking and Start Shopping?

Sometimes the toughest part of car shopping is figuring out which dealership you can work with. There are so many dealers out there, and it can be tough for bad credit borrowers to tell which ones are signed up with subprime lenders that can assist with credit challenges.

At Auto Credit Express, we’ve crafted a nationwide network of special finance dealerships that are able and willing to help bad credit borrowers get the vehicle they need. Skip the search for a dealer with bad credit resources and let us do the legwork for you.

Starting is simple: complete our free auto loan request form and we’ll look for a dealership in your local area with no obligation.

(function(d, s, id){ var js, fjs = d.getElementsByTagName(s)[0]; if (d.getElementById(id)) {return;} js = d.createElement(s); js.id = id; js.src = "http://connect.facebook.net/en_US/sdk/debug.js"; fjs.parentNode.insertBefore(js, fjs); }(document, 'script', 'facebook-jssdk'));

Source link

Continue Reading

Bad Credit

My husband signed for a car for a friend — against my wishes. Now we get notices for unpaid tolls and parking tickets. What if there’s an accident?

Published

on

My husband signed a car lease for a friend. He told me he was co-signing because his friend had bad credit even though I objected to that and asked why his friend can’t just buy a used car. Then at the last second, my husband told me that his friend’s credit “was so bad he had to take out the whole loan” in my husband’s name only.

Aside from the fact this story doesn’t add up, he is now getting second notices for unpaid tolls and parking tickets, and just sends them to his friend and trusts him to pay. He ensures the lease payments are made every month, and tells me that tolls will send collections notices before reporting to credit-collection agencies.

He also claims that his friend has insurance, but that doesn’t add up. The state we are in requires the owner to have insurance. He tells me that none of this is my business, and I have no right to be upset. Yet every time another “past due” envelope arrives I panic at the thought of the savings I worked so hard to put away might be gone in one accident, and that the home I wanted to buy with our excellent credit won’t be possible anymore.

Can you help me explain to him why this was a very bad idea, and why it’s not “none of my business,” as he says? What options do I have to get us out of this mess before we lose everything?

Panicking Wife

You can email The Moneyist with any financial and ethical questions related to coronavirus at [email protected]

Dear Panicking,

Yes, your husband is responsible for the vehicle insurance, especially if someone else is driving this car on a regular basis. If the documents say the borrower should be the primary driver, your husband’s arrangement with this friend is a “straw deal” and is likely also illegal.

But your problems go way beyond this car. Your husband’s willingness to take out a lease on behalf of a friend, and endure these collection notices, raises many red flags. What does your husband owe this person? Why would he go above and beyond any reasonable expectation of a friendship to risk his finances and credit rating in this way? The fact that he did this against your express wishes and good sense adds insult to injury. Something is wrong with the bigger picture.

As for your husband’s legal liability. According to Maggiano, DiGirolamo & Lizzi, a law firm based in Fort Lee, N.J., “As strange as it may sound, you can be held liable for a car accident that involves your vehicle — even if you weren’t present at the time. In most motor vehicle accidents, the negligent driver is the one held liable for any injuries or harm caused. However, in certain situations, the law can attribute fault to the owner of the car instead.”

The firm cites the legal principles of negligent entrustment and negligent maintenance. The first involves “entrusting your vehicle to someone who was unfit to drive.” Negligent maintenance “is the failure to properly maintain your vehicle, presenting a safety risk for anyone driving the car. This term ‘negligent maintenance’ is used because you have a duty to other drivers to keep your car in safe, working condition as to minimize the risk of an accident.”

Given that your husband owns the car and it is being driven by someone who is not paying its bills, and creating more costs through careless driving and bad parking, your husband is already fully aware that this is a bad situation. You are left without a “why” or action by your husband to address this. Take a closer look — with the help of an attorney — at your joint/separate finances, and explore ways to protect your savings. You also need to take action to restore your peace of mind.

Otherwise, you will be driving around in proverbial circles without knowing your legal and financial options. Whatever that potential action entails should be decided between you and your attorney in the first instance. I am willing to guess that this is not the first time your husband has made a decision in your marriage that has left you baffled. A lawyer should explain to you why it’s a bad idea to endure these kinds of unilateral decisions, and what you can do about them.

The Moneyist: ‘I cut his hair because he won’t pay for a haircut’: My multimillionaire husband is 90. I’ve looked after him for 41 years, but he won’t help my son

Hello there, MarketWatchers. Check out the Moneyist private Facebook

US:FB

group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

Source link

Continue Reading

Trending