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Selling auto notes efficiently involves understanding the market, working with the right buyers, and leveraging strategies that maximize profit. This article explores the process in detail, providing insights and tools to help dealerships and financial entities make well-informed decisions and capitalize on their auto loan portfolio.
Many auto lenders, BHPH lenders, and dealerships sell notes regularly. Reasons to sell notes might include obtaining additional capital to issue new loans, securitization of an existing portfolio, sale of delinquent accounts, or obtaining market benchmarks.
The universal solution to all these problems is the trading Debexpert platform, which helps hundreds of bank and non-bank lenders to sell their auto notes and BHPH loans.
BHPH loans are the most sensitive to the deterioration of the economy, job losses by debtors, and a decrease in the value of the collateral. Therefore, the sale of BHPH loans is a popular way to reduce risks for lenders because it allows fixing the profitability of loans issued and reduces the chances of non-repayment of debt. The main advantages of selling BHPH loans are:
BHPH portfolios are in great demand among debt buyers today, which allows them to get reasonable prices when selling performing and non-performing accounts. Debt buyers believe that the contact data of debtors is higher than that of other loans because the loan issuance and debt payment took place at a specific location. There is a high probability that this debtor will have fresh contact information and his place of residence is near the loan issuance, which will simplify the tax repossession, if necessary.
Today, demand for this type of portfolio exceeds the supply, because the share of BHPH loans in the auto loan industry is growing. Debt buyers are happy to consider and buy goods using this type of debt. Suppose institutional debt buyers usually buy auto notes. When selling BHPH portfolios, the circle of buyers is broader and includes mid-size retail investors and other BHPH dealerships.
Debt buyers will understand this product, so in evaluating the portfolio, there are no questions as a rule. Therefore, the transaction can be closed in a few days when using a professional intermediary.
The most common reason for selling auto notes is to get new liquidity to issue new loans. Or auto notes are sold to save time collecting a non-performing debt. Let's look at this in more detail:
Today, hundreds of auto lenders and dealers sell their portfolios using a forward flow mechanism (fixing the sale price on loans to be issued in the future), making the business's operating model more predictable and sustainable.
Sellers don't have to be expert debt salespeople to get the best price for a portfolio. Debexpert has the unique experience of selling over 700 portfolios a year and a dedicated team that will do all the work for the loan originator. And best of all, Debexpert's platform is free for the seller.
Step 1. Debt Portfolio Analysis - The Debexpert team, will show you how to upload your portfolio from the system. After that, our analysts will perform an in-depth analysis and tell you about the strengths and weaknesses and market prices for similar portfolios.
Step 2. Sale Strategy - To maximize the return on the portfolio, you need to develop a selling strategy, namely whether to sell the portfolio as a whole or break it up into parts. How to group accounts by type of debt, what kind of sale to choose: Sealed Bid, English, Hybrid. When to publish your portfolio and how much time to give buyers for analysis. When selling, all these questions need to be considered, and the Debexpert team will be your best helper.
Step 3. Presale - The best sales results can be achieved if the buyers know about the portfolio sale, get answers to all their questions, and provide their offer in time.
Step 4. Buyer Competition - Debexpert has over 500 debt buyers who bid online, thus ensuring the maximum price for their debt portfolio.
Step 5. Close the deal - It is essential to use the right sales template for a successful sale and to sign it quickly with the buyer. Using a Debexpert Purchase Sale Agreement, the lender and debt buyer will always be protected, and electronic workflow will allow the contract to be signed within minutes.
Step 6. Post Sale - After the sale, the buyer may have questions about the documents or the specific debtor,—it's most convenient to answer questions and pass on additional information using the CRM system of Debexpert.
We have hundreds of satisfied sellers and buyers. Some of their testimonials are below:
Very happy to work together with Debexpert group, especially Henry with excellent client service and their teamwork is very professional, helpful and knowledgeable they go the extra mile to close for any of the clients. I really admire his work ethics. He is very hardworking and always has answers to our questions .Best part is he's always available to help. I would highly recommend this service. Thank you
Wonderful communication and support. I have always had all of my questions answered quickly, and everyone has been accommodating to make the process as easy as possible. I always look forward to seeing the new offerings, and am excited to be building a relationship with a great company!
THEY ARE EASY TO DEAL WITH AND VERY HELPFUL
Rep at debexpert.com makes working with the platform easy.
Our rep at debexpert.com has always been very proactively communicative, reaching out to make sure we are aware of trades that fit our buying box and easily accessible to answer questions and help facilitate the process.
The top advantage of selling auto notes and BHPH loans is the immediate cash flow it provides. This quick cash infusion can be used to cover dealer capital expenses and can be a lifesaver for dealerships facing financial strain. However, it's important to consider potential disadvantages as well. For instance, selling a bulk portfolio of auto notes may affect the relationships a dealership has with its finance companies.
Arrow Acceptance, for example, is a finance company that prefers to work with dealerships that maintain their own account portfolios. If a dealership suddenly sells off a large portion of their accounts, it could harm their reputation with such finance companies.
On the other hand, selling auto notes can also free up credit lines, allowing dealerships to invest in new locations or expand their floor plan. It's a method that many dealerships have used successfully to grow their businesses.
When considering selling auto notes, it's important to review all closing documents carefully. Dealers should ensure they understand the terms of the sale, including how much they will receive for each note, and what happens if a debtor defaults on a new debt after the sale.
Dealer Capital Services can provide a purchase offer for auto notes, allowing dealers to compare this method of financing against traditional bank loans or lines of credit. They can also assist with the sale of banknotes, providing another potential source of quick cash.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
