Currently, it seems that we’re all being forced to stretch our budgets further than ever before. From the thickest bureaucracy to the everyday Joe or Jane, times are lean. Economists have noted two random economic events that they have associated with hard times. Men delay buying new underwear and folks wait an extra year or two to buy a new car. Car buyers also trend toward used vehicles.
Additionally, many folks have found themselves upside-down on their mortgages, behind on their loans and battered by their sudden “high risk” credit rating. People who were recently credit-worthy find themselves in the unfamiliar position of being refused a simple car loan. Without credit, it’s a long, slow trudge to restore a credit rating once it’s been affected drastically. That’s where opportunities for non-traditional, niche financing are found these days. These previously stable, recently-rejected buyers need transportation tomorrow as much, if not more, than they do today.
Folks who have alternative sources of income need auto financing as well. Small, family-run businesses, commission-based sales professionals, sub-contractors and moonlighters whose paychecks vary due to demand have a hard time proving their income. That means there’s no way they’ll find a traditional auto loan based on a weekly pay stub. This secondary high-risk group is made up of solid, reliable, tax-paying citizens. Their willingness to make their payments is beyond question. Plus, without a vehicle, a person is limited to public transportation, car pooling or their immediate surroundings for a job. Their choices for groceries and supplies become limited. The time and money they would save by owning a vehicle would practically make their payments for them. Rather than high risk, these people are high need.
While there are many luxury cars, cars are no longer a luxury item. People must have a car to get by in our spread-out society. Commuting is common. Traffic patterns show people don’t live where they work. It’s been said that while a person can’t drive their home to their job, they can live in their car.
We tweaked a tried and true concept to devise a business plan to rally investment funding from compelled venture capitalists. Basically, this is our plan.
1. We have a network of dealers who offer traditional lot-based “buy here, pay here” financing to the general public. We purchase their loan contracts and promissory notes from the dealers, who are completely in charge of the loan’s origination. We secure our interest with our security instrument, the car title.
2. Our overhead is low because we don’t have brick-and-mortar offices or branches to maintain. The entire transaction is handled via documents rather than physical interaction. The dealers send us all the required paperwork to sell the loan. We handle the rest.
3. We offer a special discounted rate to our dealers because they take more responsibility for the vehicle’s state of being, as well as the customer’s satisfaction. Their dedicated participation is vital for our success. We rely on the dealer to make each sale work to the customer’s satisfaction so we generate repeat sales and word-of-mouth business. To that end, we only deal with a hand-picked community of select dealerships. We give the dealers a five percent discount for their good work, provided they agree to the following conditions.
a) The dealer must perform a thorough mechanical inspection of the vehicle. Any necessary repairs will be made prior to the sale.
b) Our name must be listed as lien-holder on the insurance prior to delivering the vehicle. That protects our investment in case of accident.
c) For any vehicles sold with more than 70 percent of the car’s market value being financed, an extended warranty and Gap insurance must be provided by the dealership.
d) The dealership must assist the used car owner with reasonable repairs for 60 days from the date of delivery.
4. We resell any repossessed vehicles, or other vehicles we need to liquidate, directly to the public on our participating dealers’ lots. That nets us more money per sale, as opposed to wholesaling or selling at a local auction. We average a savings of $2,000 per car with this mutually beneficial method. Plus, the extra inventory brings traffic to the lot.
5. In actuality, our job is to handle the loan, boost sales and improve business for all involved parties. Because the dealerships function as our headquarters and an easily-managed team of home workers can monitor loan payments inexpensively, we keep overhead very low.
We anticipate this opportunity to yield in excess of two to three percent interest on investment annually. We are actively seeking motivated investors for our low-risk project.