What really occurred when my auto loan was sold?
I just bought a new Mitsubishi earlier this month. I bought the car at dealer invoice at 0% APR for 5 years. Mitsubishi Motors, I thought, would be servicing the loan. Not two weeks later I received a cordial notice that my auto loan was purchased by Merrill Lynch. I am aware that loans of all types (mortgages, credit card debt, etc) are bundled and sold to investors. But what possible return could an investor expect on a 0% interest car loan? My guess is that Mitsubishi Motors needed cash and unloaded my and other's loans at below face value. In other words, my K car loan was bought for, say, K. Therefore, Merrill Lynch can be expected to make K over the next 5 years and that is what invesetors are interested in. Does this sound correct? Or was my auto loan purchased for face value and bundled with other high-risk debt in order to lower the weighted credit risk of the bundle and make it more attractive (I have excellent credit). Any answers would be appreciated.
June 12th, 2009 at 1:42 pm
I can tell you exactly. The loan is booked at discount by Mitsubishi Motors based on the interest they should charge you.
I've found some good sources here…
http://auto.deal4-you.com/
Good Luck.