Might be a silly question but….


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  • I am selling a car with owner financing (I know, not real estate), and I have written the prom note and am schedule and everything I will need to make the transaction happen. But I am trying to figure out what the yield on my ‘loan’ will be. The car is being sold for $15,000. Buyer is paying $1,000 down with a 34 month loan on the remaining balance fully amortized at 12% per annum. My total interest over the life of the loan will be 2616.07 because of 7 days’ interest that will accrue prior to the first payment being due.

    I have googled until my eyes crossed, but all I can find is how to calculate yield on a discount note, and since this is a brand new note and I’m not buying the note at a discount I’m not sure how to calculate my yield. Would I just take total interest and divide it by the loan amount? That would be 18.69% which seems pretty good to me, but I want to be sure that’s a ‘true’ number.

    Any help is greatly appreciated!
    Ryan

    Ryan
    To figure your yield need to know your cost in the vehicle you are selling.

    I see. I figured there was something I was missing. Well I’m taking a loss on that, but it’s a necessary evil lol

    So there is no way to figure out the yield on a note without knowing the value of the collateral?

    Yield is a reflection on four items N number of payments or in other words length of time I which is your interest or yield. PV or your present balance or amount invested and PMT or your payment amount. Given any 3 you can figure the 4th.

    Got it. So on a branch new note, the interest rate will equal the yield so long as there are no points or anything involved correct?

    Brand new*

    You got it.

    Thanks for the help Don, you made it easy 🙂 lol

    Do what you wish but if i wad doing it i would put them on title and you as lien holder. Get a POA and file a UCC1 on the deal.

    What would I use the POA for and what is a UCC1? As it stands, I have a bill of sale and secured promissory note prepared and to be signed tomorrow and I will be holding the title myself and not transferring until settlement of the note. I’m open to any suggestions.

    I’ve also installed a tracker into the car that can disable it if he kisses a payment to make a repo easier if it has to happen

    Uniform commercial code. Way to secure and show to the world a persopersonal property transaction. Recorded at the county level. What happens if that person KILLS SOMEONE WITH YOUR CAR. Much better to be a lien holder. POA for insurance and title issues.

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