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Wesley Gomez
Wesley Gomez

Buy Here Pay Here Note Buyers

Every week there are more and more small finance companies offering to buy receivable from BHPH dealerships. The improving economy has pumped capital back into the market that was starving for funding sources just a few short years ago.

buy here pay here note buyers

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Cars on buy-here, pay-here lots tend to be older, low-value vehicles. The average cost for a car on a buy-here, pay-here lot in 2018 was $7,004, and the average down payment was $950, according to a 2019 industry report from the National Independent Automobile Dealers Association.

Buy-here, pay-here dealers may also hit you with other fees. These high costs can result in financial trouble: More than one in three borrowers defaulted on buy-here, pay-here loans in 2019, according to a 2019 report by the National Independent Automobile Dealers Association and the National Alliance of Buy Here, Pay Here Dealers.

Dealers want to be sure they can easily repossess the car if you stop making your payments. About 45% of buy-here, pay-here dealers install devices that track the car or can prevent it from starting, helping the dealer recover the vehicle if you default on the loan. Giving up a measure of your privacy may be a nonstarter for you.

Before you head to a buy-here, pay-here lot, check your credit and consider applying for preapproval from a few lenders who consider people with bad credit. This could help you compare interest rates and loan terms across lenders and find the best deal for you on a car loan.

Hudson Cook's Tom Hudson, seen here during Used Car Week last year in Las Vegas, shared his Top 10 list of how to recognize buy-here, pay-here dealers who might be on their way out of business. (Photo by Jonathan Fredin)

With the closing weekend of August upon us, Hudson Cook senior partner and chairman Tom Hudson shared his Top 10 list of practices buy-here, pay-here dealers need to recognize so they not only avoid a bad month, but the possibility of being on their way out of business.

If you are new to the buy-here, pay-here world, you absolutely must learn how the activities of servicing, collections, repossession and sale of repossessed vehicles are regulated. If not, you will be flying blind with regard to half of your business.

To get more detailed, real-world knowledge on buy-here, pay-here law, operators can join Hudson and some of the most-respected legal experts in the country at Innovate: The Independent Dealer Industry Conference, Sept. 20-23 in Fort Worth, Texas.

The above list of pros and cons is not 100% complete. There are other ways to boost cash flow to fund your expansion goals. At PrimaLend, we specialize in developing creative lending solutions that leverage assets in three key categories:

With less capital available, a number of banks, specialty finance companies, note buyers and indirect lenders have pulled back funding or even closed their doors. And many of those that continue to serve the subprime space have tightened credit standards, lowered credit limits and charged deeper discount fees for dealership originations. That has often resulted in reduced profit margins and fewer sales for dealerships that serve subprime buyers.

Certain financial institutions, including banks, accept promissory notes from its seller. However, the due diligence process may become longer. This is also called cashing your promissory note, where the bank gives cash at a discounted price of the note.

Today there are fewer capital sources for the BHPH market than a few years ago. At that time, hedge funds saw the BHPH market as a winning proposition, but due to a lack of familiarity with the dynamics of the market, they invested in portfolios doomed to crash.

Dealers are better positioned today because there is less competition for vehicles in the five to eight year range. One auction service recently noted a five to six week inventory of vehicles in the six to 10-year age range.

Capital resources are vital to control cash-flow in a BHPH dealership. However, there are many other improvements that can be made to policies and operations that will stabilize cash-flow and make your dealership more attractive to a capital company. Here are a few tips that should be considered for improvement:

I want to sell my mortgage note but where do I start? The process is actually very simple for the note seller. Before you begin the note sale process, make sure you have all of the necessary information to receive a mortgage note quote. This will include the property address, the loan amount, the interest rate, the payback period, and the name of the property owner. If you are not sure, or you are missing any information pertaining to the note for sale, please feel free to contact us and speak to a live person to answer your questions directly.

This entire process of selling a mortgage note will take anywhere from 15 days to 30 days depending on the state/property location, the availability of the local appraisers, the availability of the title companies providing the title search, etc. We pay for ALL costs associated with the purchase of your mortgage asset, including appraisal, BPO, and title fees.

How is market value determined on a real estate receivable being sold to a note investor on the secondary mortgage market? This is a question that comes up many times daily in this industry. There are many primary and secondary variables that come into play when determining the value of a real estate receivable for sale.

When selling a note on the secondary market there two are perspectives that need to be addressed. The first is the perspective of the borrower, or the party making the mortgage payment. The second is the perspective of the new lender that is going to be receiving the monthly payments. Just to be clear, the borrower owns the property, and the lender owns the mortgage debt.

When a loan is sold from one lender to another, nothing changes for the borrower whatsoever other than where and how the borrower makes the mortgage payment. The new lender must adhere to the same exact terms and language in the original mortgage contract that was agreed upon. No lender can come in and change anything without all parties agreeing to the change. Nor, is that desired by the new lender. A lender usually buys a mortgage note because they typically are looking to simply collect the monthly payment as-is, because they like the loan structure.

AX is the fastest growing residential and commercial mortgage note buyer in the country today. We can fund the purchase of your mortgage note in as little as 15 business days. When it comes to selling a mortgage note on the secondary mortgage market, the chances of successfully reaching your financial goals and securing the highest payout become greatly increased when using the right direct mortgage note buyers and funding source. As one of the fastest-growing mortgage note buying companies, we pride ourselves on the absolute fastest turnaround to receiving cash for your mortgage note and the most aggressive offers on your asset.

Because a mortgage note is a security instrument, it can be bought and sold on the secondary mortgage market. Therefore, mortgage lenders sometimes sell mortgage notes to real estate investors who are attracted to these relatively risk-free investments and the potential to earn passive income.

There may be more maintenance required on a used car that's out of warranty, and its financing may be a bit more expensive. But, choosing a vehicle with a good predicted reliability rating and low ownership costs can help you saa tremendous amount of money.

Fortunately, used car buyers have more resources today than ever to learn about repair costs, frequent problems, and reliability. Information about certified pre-owned warranty coverage, average costs for common repairs, and predicted reliability ratings can be found in our used car reviews. You can see what issues drivers are dealing with by checking out dedicated owners' websites, such as for the Honda Odyssey minivan. If owners of a particular car are having problems, they're probably talking about them somewhere on the internet. Just search for the car's name and "problems" in any search engine to get an idea of common issues.

Not sure if you want to take the leap into a used car with no warranty coverage? There is a used car option that does have factory warranty coverage. Manufacturer-certified pre-owned cars (CPO cars) offer a blend of used-car affordability with manufacturer-backed warranty coverage. They're usually low-mileage cars that are just a few years old, with service records and no history of accidents. They are often cars returned at the end of leases, dealership service loaner vehicles, or vehicles driven by dealer or automaker staff.

If you're sitting on a pile of money and plan to pay cash, you can skip this section. If, however, you're like most used car buyers, you'll need a loan to help pay for your used vehicle. It's true that you can have the dealership's finance office arrange your financing. Still, if you want to save money, you need to get a pre-approved financing offer before you get anywhere near a car dealer. A dealer may be able to beat your pre-approved loan, but if you don't have one, they'll have no incentive to do so.

Shopping and applying for used car financing is similar to getting a new car loan, but there are some important differences. Because lenders consider used car loans somewhat more risky than new car loans, you should expect to pay a higher interest rate. Lenders typically consider used car loans riskier for several reasons, including the fact that their values are less predictable. It's the car's value that acts as collateral on the loan. Used car buyers also may face higher repair costs, which can compete with making timely car payments. 041b061a72


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