All Topics / Creative Investing / Standard vendor terms

Viewing 3 posts - 1 through 3 (of 3 total)
  • Profile photo of David AndersonDavid Anderson
    Member
    @david-anderson
    Join Date: 2009
    Post Count: 17

    Hi guys,

    What are standard vendor finance terms(I understand there are no hard rules)

    20% vendor finance (ie deposit) over a 24 month period? Is there a list with these types of thing I could view or some training featuring this?

    Regards.

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Hi David

    Some of the techniques used for Vendor Finance are:
    1.  An Instalment Contract
    2.  A Second Mortgage Carry-back
    3.  A Lease/Option

    As you mentioned 20% vendor finance as a deposit, I believe you're considering a Second Mortgage Carry-back (SMCB).  Our last two SMCB's were structured as follows:
    a.  20% of the purchase price was carried back by the seller, over 5 years.  We pay $420 per month to the seller and this $420 comes off the amount owed.  We then have a balloon payment for the remainder at the end of the 5 year term.  However, as you will have seen, it's an interest free loan.
    b.  20% of the purchase price was carried back by the seller over three years with no payments and no interest over that 3 years.  If we haven't paid it off in three years, we commence payments, over another three years at 5% interest, with the amount owing to be paid off at the end of this second three year period.

    As you can see, it boils down to whatever you can negotiate.

    Cheers,  Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
    Email Me | Phone Me

    An alternative way to finance your home.

    Profile photo of David AndersonDavid Anderson
    Member
    @david-anderson
    Join Date: 2009
    Post Count: 17

    Interesting ball game indeed!

    Thanks for sharing your knowledge.

Viewing 3 posts - 1 through 3 (of 3 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.