: You need a pre-arranged outlet for repossessed vehicles, such as a partnership with a licensed dealer, as individual investors often lack the necessary dealer licenses for high-volume sales. Pros and Cons Higher yields than traditional real estate notes Active management required (collections, repos) Shorter terms mean quicker capital rotation Rapidly depreciating collateral High demand from liquidity-starved dealers Significant regulatory and licensing hurdles

For further research on the risks and legalities of auto financing, the FTC's CARS Rule provides guidance on consumer protection and dealership transparency. What to Know When Buying a New Car - Consumer Reports

: Unlike real estate, vehicles are depreciating assets. If a car is repossessed, it is rarely in good condition and requires repairs before resale.

: The discount accounts for the high risk of subprime borrower defaults and the cost of capital for the dealer. Operational Risks

: Focus on reliable, high-resale models like Toyota or trucks, and avoid high-maintenance "muscle" cars.

: Investors can purchase notes at a percentage of face value, potentially yielding effective annual percentage rates (APRs) of 15% to 30% or higher.