How to Buy Discounted Car Notes

by MayankJ
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car image by Brett Bouwer from

A car note is a type of vehicle loan typically created at used-car dealerships. The individual buying the vehicle is unable to obtain financing through traditional finance companies, so the dealer writes up a car note. The car note is an agreement from the purchaser to pay a specific amount on the car each month, similar to a loan but for a used vehicle. The new car owner pays each month on the note at the set interest rate until the car is paid in full. Anyone interested in buying the car note from the dealership that made the note is able to purchase the note so that the buyer of the vehicle must make payments to anyone that bought the note. The buyer of the note receives money in place of the car dealership that wrote the note. Buying a discounted car note is easier than many investors might think.

Step 1

Look into the state laws regarding the purchase of car notes. If it is used as a business venture, the state might require a license or paperwork.

Step 2

Obtain financing. Financing is a loan from a bank or lending institution, and while it is possible to pay the full amount of a note out of pocket, more expensive notes might need more funds. The amount will differ for each car note, but typical ranges are similar to the cost of a used vehicle. Try getting between $5,000 to $10,000 per car so that enough money is available for expensive car notes.

Step 3

Go to a used-car dealership. Dealerships that have a buy-here, pay-here policy are usually dealerships that create car notes. These are the ideal dealerships.

Step 4

Talk to the dealer about the purchase of car notes. If the dealership creates car notes for customers, they are sometimes willing to sell at a discount, especially when they need money to increase inventory. Point out that they will get a lump sum of money for the purchase of new vehicles.

Step 5

Get the paperwork completed with the dealer. The dealer draws up application forms and a contract is drafted. This is the car note. Look over the credit history of the individual that purchased the vehicle and make sure they have an acceptable credit history and steady employment. Approve the individual if they are acceptable.

Step 6

Pay the dealership the agreed-on price and then start receiving monthly payments for the vehicle, including the interest.

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