You might not have ever considered investing in indirect automobile financing; stocks and real estate tend to hog up all the attention of investors. But there is a hidden gem of money to be made in the form of indirect automobile financing. Indirect automobile financing is when a borrower receives a loan from a middleman company, such as Consumer Portfolio Services, and use that money to buy an automobile. These borrowers usually are denied by big loaners like banks and are willing to pay higher interest rates through these types of companies. So, you might be wondering why you should invest in indirect automobile financing. Here are a few reasons why.
Investments Can Have Better Returns Than Other Loan Investments
Since the interest rate is higher than most other types of loans, an investor can receive better returns though this type of investment. Interest also compounds daily, which can add up to high yields. If you are worried about whether or not the middleman takes a cut, that may not be the case. Some companies only facilitate loans between investors and borrowers.
They Can Be Less Risky
There is no such thing as a “no-risk” investment. That said, indirect automobile financing is relatively safe. A good credit rating is necessary for the survival of the middleman’s business. Their entire purpose is to be a dependable purchaser of automobiles. As such, the company you are using will likely be reliable and trustworthy. The middleman is also liable to lose money on investments, so they have a personal interest in ensuring that they make returns on their own part in the investment.
They Are Easy to Invest In
This form of investment doesn’t require a huge amount of money to get a slice of the pie. Many companies offer low requirements for investment, some offering $1,000 minimum amounts; a small investment is less risky than a larger one. Compared to real estate or stocks, indirect-automobile financing doesn’t require much investment or risk.
They Can Have Strong Yields and Low Risk
Indirect-automobile financing can be a great way to invest your money. It has solid yields, little risk, and a low bar for entry. It can be an especially good investment for new investors. Sure, stocks and real estate get all the hubbub, but they’re far from the only options