Time-Sale Financing

Categories: Credit

Not to be confused with timeshare financing, which you'll learn all about if you accept our free week's vacation to the Shmoop resort in the beautiful Industrial Estates section of unincorporated Tampa Hills, Florida.

Time-sale financing involves loans made from retailers to their clients. The most common form involves auto dealers, who provide financing for people who buy their cars.

Under a time-sale structure, these dealers would then sell the auto financing they originate to a third party (usually a bank or other institution). They sell the loans at a discount to their face value.

The car dealership doesn't get the full value of the loan, but they also don't have to carry the risk of default. They cash in early, leaving some money on the table, but getting a guaranteed return. Meanwhile, the bank now has the loan. They collect the payments from the borrower. They take on the risk that the car buyer might stop making the payments. But, as long as all the interest and principal gets paid, the bank stands to make a profit from the purchased loan.

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Finance: What is a Surety Bond?0 Views

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Finance allah shmoop What is a surety bond Think sure

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It t like certainty Remember when you were a kid

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at summer camp and had to pony up a buck

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to prove your heavy roller status at friday night's poker

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game And then there was a buddy who promised to

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pay more than that if you lost more than your

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buck Well surety bonds air kind of like that We

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repeat kind of a surety bond is an agreement between

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three parties One party guarantees that a second party will

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fulfil a promise to the third party For example one

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signer might guarantee that a small business will honor a

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government contract That is that small business will have to

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go borrow a whole bunch of money to go build

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a bunch of fence wire stuff for the government that

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they would need somewhere in the south And then some

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bigger contractor would guarantee that that small business will in

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fact perform on the contract If the small business doesn't

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perform the contract like as guaranteed building whatever fencing materials

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and the government wanted to build will the person who

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signed on their behalf would likely have to either pay

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up or build the fence themselves The big guy i

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either guarantor gives the little guy the principal surety in

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delivering the contract to whoever wants it toe happen A

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k a The oblige g remember that song about the

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government there yet oblige E ope elijah Life goes on

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Sorry we're done anyway all the parties involved bond with

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certainty the delivery of whatever product or service that surety

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bond is standing behind So yeah that's what it is 00:01:36.669 --> [endTime] And don't call us surety

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