If I put up my house against a truck loan and incorporate...

Never put up anything as collateral you can't afford to lose.

Especially in this credit environment.

For example, say you wreck the truck, the loan does not go away, but your ability to earn money using the truck does. The bank still needs its money, and will expect to use the collateral as payment.

 

You won't lose the house if you keep making the payments but it's a very foolish thing to do . You should never get into trucking unless you have at least $10 ,000 cash reserve . But explain this . Are you just going to get $50,000 cash and then buy the truck and have the business own the truck ? Are you borrowing 15 -20 years to buy a truck that won't last 5 ?
Have you discussed your options with an accountant and attorney ?
You need more professional advice than what you'll get here .

 

There are a lot of finance companies your dealer can use. Their requirements vary wildly. Many will take into consideration if you are a homeowner simply to assess you as a risk, but none that I know of asked for collateral unless it was another truck. Your dealer may prefer that finance company because they share the interest or other perks. Have them also try Mission, Daimler-Chrysler, Concordia, CEL, many many others.

 

That doesn't make sense . If you need the home for collateral just get a bank loan and forget the finance company . The interest rate will be a lot lower . You'll be able to deduct the home loan interest on personal taxes and truck depreciation on business taxes . I'm not advising doing this but if you're determined to do it that's up to you .

 

DO NOT directly pledge your home to the finance company. EVER.

If your home is the only asset you have then that doesn't leave you too many options. I'll assume you have been very thorough in evaluating the opportunity and the company involved.

Better than going through the finance company would be to take either a mortgage, or line of equity against your house through your own bank, and buying the truck outright from the dealer. You could also set up an operating line of credit with very favourable terms. Of course because the loan is for business purposes, all the interest is tax deductable.

For more "Fun With Figures", if you have an RRSP you could transfer the assets to a self-directed plan and use it (via a mortgage) to fund your business. Then all your interest payments come back to you with only the self-directed fee going to the financial institution (which then becomes fully deductable).

While incorporating will protect you from some liabilities, it will not protect you fully, and if you are also a director of your company your protection will be even less. If this is your first business venture you will likely have to sign a personal guarantee. If you are married, you may want to consider transferring the house to your spouse, set up a company in her name to do the purchase and a separate company in your name to operate the truck, or set it up so that she is a director, but you are not.

As always, you should seek local, professional guidance and YMMV.

 

i'm amazed this question has to even be asked. incorperating will not protect your house if YOU put it up as colateral. not only do you risk loosing it if the business fails but there are MANY crooked lenders out there who would go out of there way to make sure they get your house