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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.
What else can I help you with?
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.
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.
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.
Is it possible to secure a lower price on a car by paying in cash?
Paying in cash for a car may sometimes help you negotiate a lower price, as it can save the seller money on financing fees. However, the impact on the final price can vary depending on the seller and the specific circumstances.
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.
How is the Conversation between 3 a buyer and car seller?
In the conversation between a buyer and a car seller, the buyer typically expresses interest in a specific car model and asks about its features, pricing, and condition. The seller responds with details about the car, including its history, mileage, and any warranties. They may also negotiate on the price, while the buyer may inquire about financing options or trade-in possibilities. Ultimately, both parties aim to reach an agreement that satisfies the buyer's needs and the seller's terms.
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.
How can I finance a car with a private seller?
To finance a car with a private seller, you can consider getting a personal loan from a bank or credit union, using a peer-to-peer lending platform, or exploring financing options through online lenders. Be sure to check your credit score, compare interest rates, and negotiate the terms of the loan with the private seller before finalizing the deal.
Does paying cash for a car typically result in a lower price?
Yes, paying cash for a car can often result in a lower price because it eliminates the need for financing costs and allows for more negotiation leverage with the seller.
