Finance Company

Why Would You Want to Become Your Own Finance Company?

Does your business operation or professional practice require a significant or on-going investment in automobiles, trucks, forklifts, production tools, computers, medical/dental or laboratory equipment?

Does your business use a line of credit with a lending institution?

Would your company benefit from financing your customers purchases, thereby allowing them to buy now without the hassle of going to third party lenders?

Would you like to make the profit that is currently made by third party lenders on installment loans, mortgage loans, financing leases and operating leases?

Have you lost money in your investment portfolio?

Will you be in a higher tax bracket when you retire than you are today?

If you answered "yes" to any or all of the questions above, consider the advantage of becoming a finance company.

Every business owner is plagued by three major wealth transfers:

Taxes

Interest paid to others
Investment losses

These wealth transfers by themselves are bad enough, but, compounded by the opportunity cost (interest that could have been earned on the money had it not been transferred to someone else), a business owner’s loss may be in the hundreds of thousands of dollars.

A BUSINESS OWNER HAS OPTIONS

Option 1- Use financing services from banks and other third party lenders while depositing the business owner’s capital in banks, investment accounts and retirement plans.

or, better yet...

Option 2- Start a finance company that will recapture the profit the business owner would have given to third party lenders, and still earn a competitive return, without market risk and without the bracket creep most retirement plan participants face.

A Real Life Story of a Smart and Successful Dentist

A very successful dentist lost 46% in his investment and retirement accounts a couple of years ago. While his investments (like many of ours) have bounced back a little, they have not reached anywhere near their previous high levels.

The dentist feels that if he were able to finance his patients’ dental procedures, the revenue to his dental practice would increase by over 30%.

The dentist also realizes that any money he directs to his retirement account may not be withdrawn without penalty until age 59½, and that, contrary to earlier expectations, he most likely will be in a higher tax bracket due to tax rate increases.

Finance companies are lining up to lend to his patients, but they will charge him a 10% factoring fee and also charge the patients between 12 and 18%.

This successful dentist wants to do a few things:

Stop losing money on his investments.
Increase the revenue to his practice.
Earn the money he and his patients would be paying to third party finance company.

The Perfect Plan

The dentist redirected his investment accounts and retirement contributions to capitalize his finance company.
The dentist set up an over-funded, dividend-paying whole life policy to hold the capital not currently being used for financing.
The dentist contracted with a group to be the administrative arm of his finance company.

The Results

The dentist is earning 13 -14% on his assets with no market risk.
The revenue from his dental practice has increased and he does not have to pay a 10% factoring fee.
As the dental practice has additional financing needs, his own finance company will place the loans, keeping the profit that third party lenders would have made from the dentist.
By stopping the funding of his retirement plan, the dentist doesn’t have to worry about deferring money at lower tax rates, then having the government tax a bigger share when he finally takes distributions.
The dentist has liquidity, use and control of his money.