Can you buy car notes like you buy real estate notes

[Kevin Frett]

I'm not sure if there's a market for this or if this even exists. Let me know.

[Gary Headrick]

I was in the car paper business for 5 years so have some experience. The good news is you can make far more money with car paper than RE (I was making 29.85%APR which in actuality works out at 17%). The bad news is that are MULTIPLE pitfalls. As mentioned most new car dealers have floor plans or deal with customers with decent credit. The market is with used car dealers. Broad generalization is that used car dealers are deserving of their bad rep. A lot of shady folks are in the biz. So first you need a reputable dealer and hammer out an agreement with them. You will buy the paper at x% of face value and they will assign the note to you. An even bigger issue is what is your arrangement with the dealer on selling your repos and you will have a lot of them - about 10% of sales. You will be responsible for the repair of the repo (they never arrive nice). How and under what arrangement will it be resold. Highly unlikely that you will get a dealer license so you have to find an outlet for resales.

The next issue is the car itself. You will quickly learn what models are reliable and easy to be repaired. For instance, Toyotas are reliable but the parts are expensive. Stay away from muscle cars. Trucks are usually good and have decent resale.

Next comes the customer. The majority will have less than stellar credit (saw one where his score was 429 - must have stiffed the paper boy). Get an extensive friends and family contact list as these people change phones and residences like you change socks.  The majority (again a generalization) think their car payment should cover everything like insurance and repairs so if it breaks down, many will just walk away. You will have to chase about a third of them monthly and be prepared for every lie in the book. Your post office box (never give out your home address and you should probably use a pseudonym) will be filled with insurance cancellation notices and insurance companies almost never tell you when it is reinstated.

Have a good repo service (believe me you don't want to do it) and learn how to find repo guys in other states because you will have to chase some. Also find repair services that will repair the car to be resold - not showroom condition.

The technology has improved on starter interrupt if not paid on time and car locator devices but they cost so figure out who is paying and how much.

Although the business was good to me monetarily, it just wore me out.