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Strategies & Market Trends : Action & Options- Taxikid plays -- Ignore unavailable to you. Want to Upgrade?

To: taxikid who wrote (2447)	10/23/1997 11:47:00 PM
From: peter n matzke	Read Replies (1) \| Respond to of 4339

hi taxi, i like the approach of eliminating the relationship with unprofitable dealerships but this will reduce future loans and revenues i could be off base but i believe that income is shown for the total loan agreement at its inception due to accounting and tax regulations. ie when the delaer sells a car to a customer a loan is set up example 10,000 car 5 yr loan 21% int total finane charge 8,000 the finance company shows the 8,000 as income then tries to determine its estimated proceeds. many of these loans default in the first year, i think its about 25% if the default occurs in the first 90-180 days the creditor ends up charging back the dealer the full loan origination fees, trying to recoup some of their losses. i think ford motor credit company says they lose somewhere on the range of 1-2k per loan default they average around 4% of all loans as losses but they are dealing witha better clientele there are a lot of kinks in these type of loans hard to verify, unstabable, but not to say you can't make money i personally like to write loans at 25% imo only and my opinion was damaged last week, feeling much better this week