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Quoted: He is 19 and commuting 30+ miles each way in a 2004 car. Yes. That is a good lesson, but another lesson is you do what you have to do to be a reliable employ with a reliable ride. View Quote View All Quotes View All Quotes Quoted: Quoted: This. You wanna help him? If he is making the payments, help him build his credit. You want to really help him? Teach him to pay cash for cars and not finance depreciating assets. He is 19 and commuting 30+ miles each way in a 2004 car. Yes. That is a good lesson, but another lesson is you do what you have to do to be a reliable employ with a reliable ride. What's the minimum cost of a reliable car? Our family car that we take vacations in, that my wife drives to work every day, is a 2004 suburban with over 260,000 miles on it. It's never failed to get her there yet. My truck is a 2007 with over 200,000. My son's car is a 2006 with about 160,000, and he's taking it to college over 3 hours away this fall. How much debt should I go into so that we are "reliable" employees? |
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Quoted: Yes, that is the strange thing. I have over 800 credit score, but as a cosigner the loan was rejected, but I am confident I could get it with me as primary. View Quote This doesn't compute. Co-signing is essentially telling the bank, "if the lendee doesn't pay, I'll pay." I'm not in the field, but I can't imagine a bank or credit union not processing a loan with an 800+ cosigner. Find another bank or credit union. |
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Continue being a good, and hopefully not enabling, dad and rest well. Not a tax event.
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Quoted: Skipped college and went straight into the trades. No drugs, no smoking, no drinking. Incredibly good young man. View Quote View All Quotes View All Quotes Quoted: Skipped college and went straight into the trades. No drugs, no smoking, no drinking. Incredibly good young man. He can't get a loan. |
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Quoted: He is on my insurance and will be listed as the primary driver. View Quote Wait...again, your posts are so confusing. He is an adult, past college age, and is still on your insurance? I didn't even know this was possible. So he still lives with you? You seem to be holding back parts of the story. He can't get a loan, you can't be cosigner with an 800+ FICO score, etc. Nothing makes sense. |
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Quoted: We are working on building his credit. He is just getting started in life. Skipped college and went straight into the trades. No drugs, no smoking, no drinking. Incredibly good young man. He can't get a loan. View Quote View All Quotes View All Quotes Quoted: Quoted: Just have him get the loan... Builds his credit ect. We are working on building his credit. He is just getting started in life. Skipped college and went straight into the trades. No drugs, no smoking, no drinking. Incredibly good young man. He can't get a loan. Not always advisable, co-sign loan with him to help build credit. |
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I did this with my kid. The main reason was at the time I could get a 2 or 3% rate because he didn't have credit they wanted 11%. I figured he could get a credit card and build credit which he has. It was only about 6 grandish. I probably should have just bought it outright at the time and put it in his name I don't remember why I didn't.
The big issue I see with this is that since you hold the loan the car will likely be registered in your name. In our case it was I eventually decided to pay it off and had it transferred to him as I didn't want the liability. At the time he had nothing and if he got in a big accident I am sure I would have been sued. I eventually took the car back in the end when he got another car. He still owed me a little on it. I gave it to the kid of a friend who lets me hunt their property. He drove it another few years. I am all for helping your kids out but consider the liability issue. I wouldn't do it again the same way too much risk. |
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Why would you tell the government about it?
Are you wanting to be extorted more? |
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Why would OP even be concerned about "tax implications"? Jeez, some people are afraid of their own shadows. No need to over-complicate things or involve "the man" in a simple family financial matter. "Concealed is concealed" and nothing nefarious about it. OP should just do whatever works for him and his son. I've borrowed money from, and loaned money to, family and friends, no big deal.
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Quoted: If your not getting the loan as a business, there isn't anything convoluted about it. If I leased an apartment for $800/month, and lived there, and subleased a room to you for $400 per month, it's not income for me. View Quote |
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Quoted: What's the minimum cost of a reliable car? Our family car that we take vacations in, that my wife drives to work every day, is a 2004 suburban with over 260,000 miles on it. It's never failed to get her there yet. My truck is a 2007 with over 200,000. My son's car is a 2006 with about 160,000, and he's taking it to college over 3 hours away this fall. View Quote View All Quotes View All Quotes Quoted: Quoted: Quoted:This. You wanna help him? If he is making the payments, help him build his credit. You want to really help him? Teach him to pay cash for cars and not finance depreciating assets. He is 19 and commuting 30+ miles each way in a 2004 car. Yes. That is a good lesson, but another lesson is you do what you have to do to be a reliable employ with a reliable ride. What's the minimum cost of a reliable car? Our family car that we take vacations in, that my wife drives to work every day, is a 2004 suburban with over 260,000 miles on it. It's never failed to get her there yet. My truck is a 2007 with over 200,000. My son's car is a 2006 with about 160,000, and he's taking it to college over 3 hours away this fall. This. So much this. My Goldwing is a 2001 with 70K miles. My Blazer is a 2001 with 250K miles and I still 4WD it for fun in the west over 1,000 miles away. My Corvette is a 2002 with 165K miles. Michigan winters suck, I got tired of getting stuck in snow drifts so stopped driving it after big snows. My wife's Trailblazer is a 2008 with 265K miles (we use that the most). I could buy any car south of $1,000,000 with cash, but I choose not to because, why? I'm thinking about getting my wife a new car. I vote for Cadillac but she wants truck. Why does your son have to have a new(er) car? And you said that he's currently driving a Lexus. Most young people should be so lucky. A luxury Lexus should last forever, right? My cheap Chevys last for longer. 30 miles one way for work. LOL. I had to drive over 100 miles one way to Detroit for years. A normal commute is 20-30 miles. I swear, some people. Grow up! If he wants a shorter commute than 30 miles, tell him to get an apartment close to work like normal people do. I did when I was his age. |
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Quoted: This. So much this. My Goldwing is a 2001 with 70K miles. My Blazer is a 2001 with 250K miles and I still 4WD it for fun in the west over 1,000 miles away. My Corvette is a 2002 with 165K miles. Michigan winters suck, I got tired of getting stuck in snow drifts so stopped driving it after big snows. My wife's Trailblazer is a 2008 with 265K miles (we use that the most). I could buy any car south of $1,000,000 with cash, but I choose not to because, why? I'm thinking about getting my wife a new car. I vote for Cadillac but she wants truck. Why does your son have to have a new(er) car? And you said that he's currently driving a Lexus. Most young people should be so lucky. A luxury Lexus should last forever, right? My cheap Chevys last for longer. 30 miles one way for work. LOL. I had to drive over 100 miles one way to Detroit for years. A normal commute is 20-30 miles. I swear, some people. Grow up! View Quote View All Quotes View All Quotes Quoted: Quoted: Quoted: Quoted:This. You wanna help him? If he is making the payments, help him build his credit. You want to really help him? Teach him to pay cash for cars and not finance depreciating assets. He is 19 and commuting 30+ miles each way in a 2004 car. Yes. That is a good lesson, but another lesson is you do what you have to do to be a reliable employ with a reliable ride. What's the minimum cost of a reliable car? Our family car that we take vacations in, that my wife drives to work every day, is a 2004 suburban with over 260,000 miles on it. It's never failed to get her there yet. My truck is a 2007 with over 200,000. My son's car is a 2006 with about 160,000, and he's taking it to college over 3 hours away this fall. This. So much this. My Goldwing is a 2001 with 70K miles. My Blazer is a 2001 with 250K miles and I still 4WD it for fun in the west over 1,000 miles away. My Corvette is a 2002 with 165K miles. Michigan winters suck, I got tired of getting stuck in snow drifts so stopped driving it after big snows. My wife's Trailblazer is a 2008 with 265K miles (we use that the most). I could buy any car south of $1,000,000 with cash, but I choose not to because, why? I'm thinking about getting my wife a new car. I vote for Cadillac but she wants truck. Why does your son have to have a new(er) car? And you said that he's currently driving a Lexus. Most young people should be so lucky. A luxury Lexus should last forever, right? My cheap Chevys last for longer. 30 miles one way for work. LOL. I had to drive over 100 miles one way to Detroit for years. A normal commute is 20-30 miles. I swear, some people. Grow up! As above, all of it! I drive a 20+ y.o. Toyota 4Runner with 250K miles on it and would not hesitate to take it cross-country. |
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I think you're being pedantic about something the IRS would spend 10x more on finding out about than reclaiming, if any liability even exists, and therefore gives zero fucks about.
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Quoted: I hope you don't have an Airbnb or you may be in for a rude surprise. View Quote View All Quotes View All Quotes Quoted: Quoted: If your not getting the loan as a business, there isn't anything convoluted about it. If I leased an apartment for $800/month, and lived there, and subleased a room to you for $400 per month, it's not income for me. Cash money between private parties still works. His landlord may have an issue with additional residents though. |
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Situations like this, from my experience, you might want to research writing off a total loss
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Quoted:As above, all of it! I drive a 20+ y.o. Toyota 4Runner with 250K miles on it and would not hesitate to take it cross-country. View Quote Yet this kid (kid!) drives a Toyota Lexus and still has to have a new car. It's not like he's driving a 40 year old Yugo. The entitlement of some people knows no bounds. If he can afford it, fine, it's his money to waste. But apparently he can't but his daddy wants to enable him. He'll learn. Or maybe not. I have one relative who is 42 years old and has yet to figure it out. |
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Quoted: Yes, that is the strange thing. I have over 800 credit score, but as a cosigner the loan was rejected, but I am confident I could get it with me as primary. View Quote View All Quotes View All Quotes Quoted: Quoted: Quoted: Just have him get the loan... Builds his credit ect. Yes, that is the strange thing. I have over 800 credit score, but as a cosigner the loan was rejected, but I am confident I could get it with me as primary. Sounds like a straw purchase. |
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Legally, you need to have a written agreement, payment plan, iirc the interest has to be the lowest reasonably available, and you have to pay taxes on the interest as income. I know this because a family member wrote my first (well, second, because they were shocked at my original rate) mortgage, it even showed up in public records.
That said, if you loan your kid $20k to buy a vehicle and they are paying you back w/ no interest, I strongly doubt the IRS is going to come after you. If it is under the gift tax amount, it could just be considered a "gift" for tax purposes, and he has to pay you back. They are unlikely to hose you, but it could happen when you are depositing the same amount, every month, in a back account. Loaning the kid a few hundred thousand to start a business or buy a home is different. Quoted: This, help him build his credit score. Also why is it any of the IRS's business what money changes hands between you and your son? View Quote Rational people would agree with you, but there is a gift tax, estate taxes, etc. But, if he is charging the kid interest (and he should), he is supposed to pay income tax on that. I bought my GF a SUV, I filed a gift tax report with the IRS. This is ridiculous, guys have been buying broads cars since cars came into existence. Our tax policy is so fucked up that you literally are supposed to file something because you bought someone a gift over a certain amount, ridiculous. |
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Buy the car and have your kid make the payments it isn't a tax issue. It's been done this way since the first time a dad bought his kid a car.
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Quoted: Wait...again, your posts are so confusing. He is an adult, past college age, and is still on your insurance? I didn't even know this was possible. So he still lives with you? You seem to be holding back parts of the story. He can't get a loan, you can't be cosigner with an 800+ FICO score, etc. Nothing makes sense. View Quote Is he liable for taxable income on a car he gets for his son who pays the note? No We are now absolved of all liability. |
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Quoted: Yet this kid (kid!) drives a Toyota Lexus and still has to have a new car. It's not like he's driving a 40 year old Yugo. The entitlement of some people knows no bounds. If he can afford it, fine, it's his money to waste. But apparently he can't but his daddy wants to enable him. He'll learn. Or maybe not. I have one relative who is 42 years old and has yet to figure it out. View Quote View All Quotes View All Quotes Quoted: Quoted:As above, all of it! I drive a 20+ y.o. Toyota 4Runner with 250K miles on it and would not hesitate to take it cross-country. Yet this kid (kid!) drives a Toyota Lexus and still has to have a new car. It's not like he's driving a 40 year old Yugo. The entitlement of some people knows no bounds. If he can afford it, fine, it's his money to waste. But apparently he can't but his daddy wants to enable him. He'll learn. Or maybe not. I have one relative who is 42 years old and has yet to figure it out. Probably correct but I think there's more to it. Helicopter parenting, financial ignorance. fear of any risks in life. Car manufacturers and sales people in general play on that fear and profit from it. Just like liberal politicians. |
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Quoted: Yes, that is the strange thing. I have over 800 credit score, but as a cosigner the loan was rejected, but I am confident I could get it with me as primary. View Quote It shouldn't be Try a credit union If need be open an account there and transfer the amount of the loan you are going to give your son. Then co sign the loan there for your son ETA If your son is buying from a dealer I'm sure 100% the financing dept will give your son a loan with you as a cosigner with that credit score and you could probably get a 2% rate on many new cars ( better rate than you guys getting the loan yourselves ) |
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Quoted: Just have him get the loan... Builds his credit ect. View Quote Quoted: No him repaying a debt to you isn't income View Quote |
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Quoted: I think you're being pedantic about something the IRS would spend 10x more on finding out about than reclaiming, if any liability even exists, and therefore gives zero fucks about. View Quote |
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Quoted: Lol. OK. Because the IRS has NEVER been used as a political weapon against white conservatives and "this will waste money" is always at the forefront of the thinking of the average DEI hire public servant. View Quote View All Quotes View All Quotes Quoted: Quoted: I think you're being pedantic about something the IRS would spend 10x more on finding out about than reclaiming, if any liability even exists, and therefore gives zero fucks about. You're right. He should hire an attorney and probably get Wipfli or even Deloitte on retainer to help him sort this non-issue out. |
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Quoted: Lol. OK. Because the IRS has NEVER been used as a political weapon against white conservatives and "this will waste money" is always at the forefront of the thinking of the average DEI hire public servant. View Quote That's a lot of persecution syndrome and current_year nonsense worked into one post. Nice! |
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Quoted: I hope you don't have an Airbnb or you may be in for a rude surprise. View Quote View All Quotes View All Quotes Quoted: Quoted: If your not getting the loan as a business, there isn't anything convoluted about it. If I leased an apartment for $800/month, and lived there, and subleased a room to you for $400 per month, it's not income for me. "If your not getting the loan as a business" and "If I leased and apartment...and subleased a room to you". Go back to school, reading is fundamental. |
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Quoted: If a bank pays me interest on a savings account, that's taxable income, but if I pay interest to a bank for a loan, that's not deductible from my income. On a completely different note... Practically speaking, the IRS doesn't track cash payments between individuals, particularly immediate family, although COC #4 precludes me from suggesting any course of action. View Quote View All Quotes View All Quotes Quoted: Quoted: Only if you make a profit out of the transaction. Otherwise it's not a tax event. If a bank pays me interest on a savings account, that's taxable income, but if I pay interest to a bank for a loan, that's not deductible from my income. On a completely different note... Practically speaking, the IRS doesn't track cash payments between individuals, particularly immediate family, although COC #4 precludes me from suggesting any course of action. This. I've transferred hundreds of thousands of dollars between me and my parents. You just wrote some checks or open a joint account and do electronic transfers between bank accounts. None of these transactions is a taxable event or goes to the IRs or raises any flags. Obvioisly don't go withdrawing cash and giving it as cash to your son to deposit in his account as the bank may file SAR even for a few thousands or if $10k or more a CTR as they don't know where the money is coming from |
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Quoted: This doesn't compute. Co-signing is essentially telling the bank, "if the lendee doesn't pay, I'll pay." I'm not in the field, but I can't imagine a bank or credit union not processing a loan with an 800+ cosigner. Find another bank or credit union. View Quote If a lending institution approves a loan to a person for a vehicle, I'm not a lawyer or in the insurance business, but I would think that the lender would require the person signing for the loan would also be named on the title because there would be a lien filed. As someone mentioned in an above post, regarding insurance, again I would hazard a guess in saying the insurance company would want the loan signer to hold the policy, and if I was in the insurance business and knew what was planned, I wouldn't write a policy unless both were named as owners on the title. |
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Update, decided not to buy new. We are going to get around a 2020 or so for half the price and pay cash. He will pay me back in full within 15 months.
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If he’s over 18 have him try and get the loan. If the rate is horrid then co-sign for him for a better rate. He’jh build credit and won’t need u next time. I wouldn’t worry about the IRS with your original plan.
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I got a 24 month loan for my oldest daughters new car when she started University. I could have paid cash, but wanted to help build her credit. I told the finance guy what I wanted the payment to be and paid cash for the balance. She got the loan in her name and I cosigned. I made every payment for her. When she graduated she had a good credit history.
Quoted: We are working on building his credit. He is just getting started in life. Skipped college and went straight into the trades. No drugs, no smoking, no drinking. Incredibly good young man. He can't get a loan. View Quote |
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That's what I had to do for my kids when I did the same thing. Of course they were slightly used cars, but I wanted them to have reliable transportation.
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Quoted: He is not repaying it to me, he is repaying it to the bank in place of me, for a car in my name until it is paid off. Maybe I should pursue a different route as it seems more convoluted than I originally thought. View Quote Be careful about having your name on the title while some else drives it. If your son, or someone he loans the vehicle to, is involved in a wreck, expect to be sued. Carry lots and lots of insurance. Tenn Code Ann 55-10-311 In all actions for injury to persons and/or to property caused by the negligent operation or use of any automobile, auto truck, motorcycle, or other motor propelled vehicle within this state, proof of ownership of the vehicle shall be prima facie evidence that the vehicle at the time of the cause of action sued on was being operated and used with authority, consent and knowledge of the owner in the very transaction out of which the injury or cause of action arose, and the proof of ownership likewise shall be prima facie evidence that the vehicle was then and there being operated by the owner, or by the owner's servant, for the owner's use and benefit and within the course and scope of the servant's employment. 55-10-312 Proof of the registration of the motor-propelled vehicle in the name of any person shall be prima facie evidence of ownership of the motor propelled vehicle by the person in whose name the vehicle is registered; and the proof of registration shall likewise be prima facie evidence that the vehicle was then and there being operated by the owner or by the owner's servant for the owner's use and benefit and within the course and scope of the servant's employment. |
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You can gift up to $18k a year without paying gift tax.
So if you buy the car and keep it titled in your name, he can pay you $18k in gifts. If you then transfer title to him, if the depreciated value is under $18k, also no tax. If the payments exceed $18k/year, or if the car value will exceed $18k at time.of transfer, you may have an issue. |
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Quoted: Too late to help now but if you are a parent with a credit card you pay in full every month (or keep at a lower balance) you should get your kids an additional user card as soon as the bank allows. My kids have been on a card account with 50k limit for years, 5-10k spending a month paid in full, the cards with their names on are locked in a safe. When they are done with college they will have a strong credit report, and if they fuck it up after that it's on them. View Quote |
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Quoted: Be careful about having your name on the title while some else drives it. If your son, or someone he loans the vehicle to, is involved in a wreck, expect to be sued. Carry lots and lots of insurance. Tenn Code Ann 55-10-311 In all actions for injury to persons and/or to property caused by the negligent operation or use of any automobile, auto truck, motorcycle, or other motor propelled vehicle within this state, proof of ownership of the vehicle shall be prima facie evidence that the vehicle at the time of the cause of action sued on was being operated and used with authority, consent and knowledge of the owner in the very transaction out of which the injury or cause of action arose, and the proof of ownership likewise shall be prima facie evidence that the vehicle was then and there being operated by the owner, or by the owner's servant, for the owner's use and benefit and within the course and scope of the servant's employment. 55-10-312 Proof of the registration of the motor-propelled vehicle in the name of any person shall be prima facie evidence of ownership of the motor propelled vehicle by the person in whose name the vehicle is registered; and the proof of registration shall likewise be prima facie evidence that the vehicle was then and there being operated by the owner or by the owner's servant for the owner's use and benefit and within the course and scope of the servant's employment. View Quote View All Quotes View All Quotes Quoted: Quoted: He is not repaying it to me, he is repaying it to the bank in place of me, for a car in my name until it is paid off. Maybe I should pursue a different route as it seems more convoluted than I originally thought. Be careful about having your name on the title while some else drives it. If your son, or someone he loans the vehicle to, is involved in a wreck, expect to be sued. Carry lots and lots of insurance. Tenn Code Ann 55-10-311 In all actions for injury to persons and/or to property caused by the negligent operation or use of any automobile, auto truck, motorcycle, or other motor propelled vehicle within this state, proof of ownership of the vehicle shall be prima facie evidence that the vehicle at the time of the cause of action sued on was being operated and used with authority, consent and knowledge of the owner in the very transaction out of which the injury or cause of action arose, and the proof of ownership likewise shall be prima facie evidence that the vehicle was then and there being operated by the owner, or by the owner's servant, for the owner's use and benefit and within the course and scope of the servant's employment. 55-10-312 Proof of the registration of the motor-propelled vehicle in the name of any person shall be prima facie evidence of ownership of the motor propelled vehicle by the person in whose name the vehicle is registered; and the proof of registration shall likewise be prima facie evidence that the vehicle was then and there being operated by the owner or by the owner's servant for the owner's use and benefit and within the course and scope of the servant's employment. Yes, I think you are right about that. I think the idea of paying half in cash and half finance, with it in his name and me cosigning makes the most sense. That leaves me a chunk of expendable cash in the event something goes wrong. |
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