My S-Corp leased a 2020 GLE 350 4matic on March 2nd. I was lead to believe I was just signing as the president of the company and not a co-signer or guarantor. My company has sufficient credit and income to lease the vehicle on its own, in fact the company had a BMW X5 loan on the business credit at the time. My company has made all on time payments via auto pay, in fact when setting up the 1st month payment via auto pay I paid twice. About a month ago I went to get a home improvement loan and they rejected the loan due to debt to income ratio. When the bank explained I have an MBFS payment on my personal credit throwing off the debit to income I was shocked. I assumed MBFS was reporting me as a guarantor or something, did some research and realized a loan shouldnât be reported on a guarantor unless the loan is in default. I contacted the credit reporting agency to file a dispute, of improper filing, and waited the 30 days. They said they verified my information with MBFS and they had all the correct info and I was listed as a co-signer. So, I contacted MBFS and they said I would have to go through the dealershipâŚ
Iâve been working with the Finance Director at the dealership I leased the car through. I assumed I might be a guarantor on the loan, which Iâm fine with, as this should not be reported on my debit to income unless the loan goes into default. The Finance Director agreed and ask MBFS about this and they said âthats just how we do itâ. (reporting guarantors as co-signers)
He did a little more digging into the contract I signed and found no where on the contract am I listed as a co-signer or guarantor.
Now MBFS has the contract under review with their legal department and I should get an answer in 2 days as to what they will want to do. The Finance Director said they might come back with 1 of these options. 1.) They void the contract and request me to sign a new contract with me as co-signer. 2.) They void the contract, I turn in the car, and they give me my âmoney" back. 3.) The guarantor agreement signed prior to the contract (outside of the actual contract) stands and MBFS is going to report me as a co-signer. 4.) Because Iâve made all on time payments they remove me from guarantor and the lease is solely on the business credit.
Iâm fine with me showing up as a guarantor for the vehicle, as long as MBFS reports it correctly to the credit bureau. However it doesnât sound like MBFS reports it that way.
Has anyone run into this problem and what are my options, all help is welcomed.
Youâre saying the MBFS claimed you should speak with the finance person? The contract is cashed and now in motion; The only thing that matters is what MBFS position is on the matter. In otherwords, do they or do they not report to your credit when youâre a guarantor? They have the underwriting authority⌠but you cannot go to just any analyst. You need the regional director for MBFS to weigh in on it. Call the GM and ask for the MBF repâs information. They need this to up the latter. I suspect the finance person isnât up to speed on these measures. As far as I knew, MBFS reported you as the cosigner- unless you were a Fortune 50 company and an official officer of the company that is recognized by MBFS. Again, this could be old news. This was what I knew a few years ago.
When I contacted MBFS directly, they said I should work through the dealership finance person. He is my point of contact and he is working my issue directly with MBFS for about a month. I believe this has been escalated all the way up to MBFS legal to review the contract, I was told this will take about 2 days. You are correct, I have since found out, MBFS does report you as a co-signer unless youâre a âFortune somethingâ company. The issue is if they have the right to do so right to do so⌠Again, Iâm not listed on the contract anywhere, as a co-signer or guarantor. So how do they have the right to report me as such if personally Iâm not on the contract.
Sounds like the contract is null and void if it wasnât signed, and frankly, they should have bounced the contract and not paid the dealership. I know MBFS âE-Validatesâ meaning you sign for the car electronically, itâs a system of checks and balances that SHOULD have stopped the F&I guy from proceeding until everything balanced out. Someone, somewhere had that contract pushed through. Now the question is, who, how and why. You most certainly should have your name SOMEWHERE and having had given them your social. Unless⌠Were you a previous client of that dealership before?
The credit bureau doesnât provide the DTI calculation (they donât know your I, or even necessarily all of your D). DTI is calculated by the new lender based in part on whatâs in your credit file, and in part on what else youâve provided on the new credit application.
Did you offer the home improvement lender records showing that the lease payments were being made by the business?
Even so, itâs not uncommon for a new lenderâs DTI calculations to include debt thatâs cosigned for another consumer or PGd for a business.
Just because you arenât paying with personal funds today, doesnât mean you wonât be six months from now if the other party becomes unable. Your home improvement lender expects to be paid either way.
And just because it doesnât show up on your credit report doesnât mean you donât have to disclose it on a loan application, if asked.
