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Additional Information About Automobile Paper We do not verify
job status or pull credit on the customers. We only consider the following: - The value of the vehicle vs. the loan balance.
- The
loan balance.
- The remaining loan term.
- The pay history.
Maximize
your pay price by: - Lower balances yield higher cents/dollar
prices, so keep the gross balance under $6,000.
- Lower terms
yield higher pay prices, so keep the term less than 30 months.
- Higher
averages yield higher prices, so make sure the NADA left side trade in value of the vehicle, including adds and deducts for
mileage is at least 45% of the gross balance.
- Keep track of
all records on a spreadsheet of our approved format.
If
you take a look at the following example you'll see this makes sense. Consider an average purchase. On average, the car
was purchased for $3,000 and sold for $6,000 with $1,000 down, $5,000 financed at 25% over 24 months with a payment of $266.86
per month. After 3 monthly payments to the dealer, the net balance on the loan is $4501.69 which is sold for $.75/$ or $3,376.27.
Multiply this times the number of cars in the pool. The dealer's Nominal Annual Return is over 190% and the Effective
Annual Return over 484%! The larger pool size, the better cents-on-the-dollar
pricing you'll get. Any loans that are not bought in a particular month can be resubmitted the next month. You can repeat
this every month. If you are considering "selling"
to a company that has Reserve and Recourse, are you really selling anything? No. They are only advancing you money against
your receivables, which is actually just a loan. If you would rather borrow against your receivables, you would do much better
pledging them at your local bank. The rates will be much better. But, if you want to sell your receivables, consider the following: When you SELL to us: - WE pay the same or more than our competitors do and we pay it all up front.
- We actually buy your loans, including the RISK.
- You
will never get a Demand Notice from us for late or defaulted loans like you will from you-know-who.
When you deal with a Reserve/Recourse company: - You are actually getting a loan, not selling
your pool.
- Most dealers are responsible for the life of every
loan including full, complete and timely payment for every one of your customers. This responsibility could last several years.
- Reserves are docked for each late payment and every default.
- You receive Demand Notices to pay if your reserve has been depleted.
- You are taking a huge risk to gamble that you will get a small portion of your
reserve.
- If you are on the hook, what incentive do they have
to make vigorous collections?
- The biggest risk to you is having
an enormous chance of getting a Demand Notice for payment that might be $10,000 or $20,000 or $100,000 depending on the size
pool.
- If your reserve is 20%, even they will tell you that
you they will "burn" at least half of it. If they tell you half, how much do you think you are really going to "burn?"
- Are they really buying your loans or are they are selling you money with no risk
to them?
- Selling to them is like gambling that you can beat
the house at its own game in Los Vegas.
Return to Selling Other Notes
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