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I have sold two cars with owner financing. In both cases, I collected 15% & 10% as a down payment and charged 20% & 24% APR respectively. I structured the deal so that I was able to make my initial purchase price through their initial their down payment and 18 monthly payments. However, the term of their loan was 30 months, so I was able to collect a full year's worth of payments as pure profit. You have to understand that you are doing this to make a profit of 50% more than what you would normally collect by selling for cash. If the numbers don't make sense then don't do it. But if the numbers are there, and you don't have anything to lose then why not try it. Anyone that tells you its a bad idea are speaking from FEAR and not from FINANCE. I used a Automotive Loan Servicing company to collect payments for me. On my second deal, they even offered to by my note but they only wanted to give me 70% of the note value. In addition to handling payment, they checked the status of insurance every quarter. But I later learned that you can send a directive to the insurance company to notify you if they ever lapse. Then you have grounds to repossess but it has to in your Retail Finance Agreement. There are a lot of people that can't get financing for a decent car. You can provide financing for a vehicle and net a good return on your assets. And...
Anytime you arrange owner financing, then you are earning income that taxable to the IRS. So, obviously it is important to understand that you have to both report and pay taxes on the interest that you've earned. Although I have a personal accountant, any tax preparation firm can prepare a 1099-INT for you to report the interest portion of the payment that you receive. By charging the buyer interest, I acted like a finance company so I paid tax on the interest income. It's no different than paying tax on the earnings of a stock dividend.
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∙ 15y ago
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Do you put not applicable in seller financing question if there is no seller financing in a real estate sale agreement?
In USreal estate contracts the rule of thumb is to leave no blank spaces. If there is no seller financing the common practice in some locations is to put in "N/A" for not applicable.
How much is a car payment on a used car?
It depends on the seller of the car or what will be your agreement. If you buy a car in a car shop preferably they have a paying scheme for that wither you pay it as good as cash, installments or by car loan financing.
I signed paper for the car but i have not picked up the car from the dealer can i change my mind?
Not enough info, What state are you in? Is there Bank financing involved, if so have they paid the seller yet? Did you pay the seller yet if a cash deal? Check laws in your state.
What does owner will carry real estate?
owner will provide 'seller financing" a purchase money mortgage. it could be either a 1st or 2nd mortgage. Seller is willing to provide some of the financing or all of it so conventional financing(banks) are not needed. You sign a promissory note with the seller an IOU a promise to pay.
who is the best loan financing company in KY?
Your best bet is to get financing at the dealership you are buying your car at. They are usually flexible and willing to work with you in order to sell the car. If you are buying from a private seller, try your personal bank, as they would be willing to give you leeway as you are already a valued customer.
What is purchase money financing?
Purchase money financing is when the seller agrees to take back a mortgage for the new buyer. It is owner financing in whole or in part.
What companies offer ways to finance a new car?
You can obtain financing for a new car purchase from a variety of sources such as banks, credit unions, online finance companies. The selling dealer will also have access to seller financing from sources such as Ford Motor Credit, Toyota Motor Credit, etc.
What is the purpose of factoring financing?
The purpose of factoring financing is to provide financing to the seller of the account in a form of cash advance. A business sells the invoices to a third party at a discount.
What is car financing?
car financing is basically when u get 10lac car at 2 lacs thry financial institutions
What minimum credit score is required to get financing for a good used car?
Generally used car financing requires a credit score of 680 or higher to be sure to be approved and get reasonable rates. If you are obtaining financing directly from the seller/dealership and put down at least 25%, someone with a credit score of 650 should find success. If you don't, however, have the income to support the payments, you WILL be turned down.
What is a seller's second mortgage?
The seller assigns keeps the first mortgage in his name, the buyer makes payments to the seller to cover the first mortgage and the sellers equity. It's sometimes called "seller financing" or "land contract".
How do you know if a used car is under finance?
Ask to see the title of the car... the seller must sign over the title to sell the car. The financing bank will hold the title until a loan is paid off, at which time the title transfers to the owner as proof the car is paid off.
