Scam or good investment?

[Lindley]

I just ran across a website, buycarnotes.com. At first glance it appears to be a very good investment opportunity. But of course, I'm weary.

I checked their claim to a BBB A+ rating and it seems legit. None of the scam-checker sites say anything bad about them. But still.....they're essentially offering a CD with a ridiculously high APY. Something doesn't feel right.

Anyone have an opinion on this site?

 

[Robert Maxwell]

Well, it's not really a CD, though. You're financing auto loans to people with really bad credit, hence the high rate of return. The company claims they'll cover you if the borrower defaults, but you're probably only covered up to your original investment. I can't imagine they'd pay you off at the promised APY in that instance.

Still, it sounds like a reasonable investment, if you don't have any misgivings about ripping off people with bad credit.

 

[Amaris]

If it seems too good to be true, it probably is. Yeah, I know, old saying, but still really relevant. I did a quick scour across the internet myself, and all I see are positive "not a scam" reviews. Places like ScamXposer.com seem legit, but I don't know who they are, and since they're not an established scambuster site, I wouldn't trust their approval. The BBB has buycarnotes.com listed as an A+ rating, but the site has been up about a year, so that doesn't say anything as of yet.

As for the site itself, I saw this:

Simple Investment Requiring Zero Work On Your End

Which is always a big bell ringer. "Zero work" usually means "zero money" when all is said and done. I don't know, I'm very leery of it myself.

 

[tharpdevenport]

It Seems To Good To Be True + the Internet = eFucking

 

[Robert Maxwell]

If it seems too good to be true, it probably is. Yeah, I know, old saying, but still really relevant. I did a quick scour across the internet myself, and all I see are positive "not a scam" reviews. Places like ScamXposer.com seem legit, but I don't know who they are, and since they're not an established scambuster site, I wouldn't trust their approval. The BBB has buycarnotes.com listed as an A+ rating, but the site has been up about a year, so that doesn't say anything as of yet.

As for the site itself, I saw this:

Simple Investment Requiring Zero Work On Your End

Which is always a big bell ringer. "Zero work" usually means "zero money" when all is said and done. I don't know, I'm very leery of it myself.

That may be true of things that have little or no initial investment. You have to plunk down $5000 minimum to do the buycarnotes.com thing. They turn around and use that money to finance car purchases, and then charge exorbitant interest to the borrower--the benefits of which Lindley would reap. The only real risk is that of default, and it's impossible to know if BCN would actually settle up if they had a rash of defaults.

 

[paudemge]

This is not legal or investment advice, just my opinion, but it actually does seem legit.
There doesn't seem to be any risk in a particular note since they replace it, the risk is if the entire company defaulted or went kaput.

You might try to pass it by clark howard.

 

[Amaris]

If it seems too good to be true, it probably is. Yeah, I know, old saying, but still really relevant. I did a quick scour across the internet myself, and all I see are positive "not a scam" reviews. Places like ScamXposer.com seem legit, but I don't know who they are, and since they're not an established scambuster site, I wouldn't trust their approval. The BBB has buycarnotes.com listed as an A+ rating, but the site has been up about a year, so that doesn't say anything as of yet.

As for the site itself, I saw this:

Simple Investment Requiring Zero Work On Your End

Which is always a big bell ringer. "Zero work" usually means "zero money" when all is said and done. I don't know, I'm very leery of it myself.

That may be true of things that have little or no initial investment. You have to plunk down $5000 minimum to do the buycarnotes.com thing. They turn around and use that money to finance car purchases, and then charge exorbitant interest to the borrower--the benefits of which Lindley would reap. The only real risk is that of default, and it's impossible to know if BCN would actually settle up if they had a rash of defaults.

Ah, I see. Well, I guess it comes down to a moral and ethical thing, and in the words of Homer Simpson: "Mora whatsa?"

 

[STR]

it's impossible to know if BCN would actually settle up if they had a rash of defaults.

No it's not. If this (really, any) lender has a rash of defaults, we all know well what will happen. These guys clearly aren't "too big to fail," so when they go to bankruptcy you (as an investor) have to wait in line behind every creditor and lawyer to get your money back, which won't be 100% as it will have to be split between you and everyone else that put money in.

To answer the OP's question, assuming this isn't a scam, your decision rests on the same criteria one uses with any high risk/high payoff investment: can you afford to lose ALL of the $5000? If you're going to be hurting, don't do it. Go buy an index fund instead, you're still going to make 10% this year. If you're willing to accept a loss as part of the game. Go for it.

 

[Holdfast]

Sounds vaguely legit to me, though I haven't checked it out in detail.

I wouldn't invest in it though; you're heavily dependent on the model they use to check the credit rating of the eventual buyers. Now, that may be a solid model, or it may not be. But without being able review it, I wouldn't invest in the company... which actually, is effectively what you're doing here, by bankrolling their acquisitions... but without any of the safety/rights of being a shareholder in the company.

Having said all of that, if their model is sound, then you may make some money. But again, if their model is sound, I'd still prefer to actually own a chunk of their company rather than merely subsidise it for the promise of jam tomorrow.

The way they're doing things now, is leveraging their purchasing power by using you to finance their investments for a lower total effective interest rate than they would otherwise. I'd prefer to be on the other side of that equation.

 

[Amaris]

Of course. Investments. It's like when I subsidized the cost of my refrigerator by standing on the street corner and dropping my pants for passersby.

 

[Holdfast]

Of course. Investments. It's like when I subsidized the cost of my refrigerator by standing on the street corner and dropping my pants for passersby.

Did they pay you to drop them or pull them up again?

Actually, come to think of it, that's a really good business plan. You get paid either way!

 

[Amaris]

Of course. Investments. It's like when I subsidized the cost of my refrigerator by standing on the street corner and dropping my pants for passersby.

Did they pay you to drop them or pull them up again?

Actually, come to think of it, that's a really good business plan. You get paid either way!

That's why I have a Ph.D (Pants halfway Down) in Business Economics.

 

[Holdfast]

More useful than an MBA (Master of Bare Ass), any day.

 

[Mr Awe]

This is not legal or investment advice, just my opinion, but it actually does seem legit.
There doesn't seem to be any risk in a particular note since they replace it, the risk is if the entire company defaulted or went kaput.

You might try to pass it by clark howard.

No risk?! This is essentially what they did with risky mortgages, made them into investment "opportunities". The people who sell the mortgages initially make money. The people who make them into investments make a commission. But, they're bad investments in the long run and those who are invested in them get reamed in the end and there were lots of really bad mortgages. We all know how *that* ended up!

Replace bad mortgages with bad car loans and you get the picture for this "opportunity."

I wouldn't be a part of history repeating itself in this case.

Mr Awe

 

[Robert Maxwell]

it's impossible to know if BCN would actually settle up if they had a rash of defaults.

No it's not. If this (really, any) lender has a rash of defaults, we all know well what will happen. These guys clearly aren't "too big to fail," so when they go to bankruptcy you (as an investor) have to wait in line behind every creditor and lawyer to get your money back, which won't be 100% as it will have to be split between you and everyone else that put money in.

To answer the OP's question, assuming this isn't a scam, your decision rests on the same criteria one uses with any high risk/high payoff investment: can you afford to lose ALL of the $5000? If you're going to be hurting, don't do it. Go buy an index fund instead, you're still going to make 10% this year. If you're willing to accept a loss as part of the game. Go for it.

You just proved my point. They claim to guarantee the notes in the event of default, and maybe they do. If they have a rash of defaults bigger than they can cover, though, they'll go bankrupt--and maybe you'll get some of your money back, or nothing, depending on what priority a bankruptcy court assigns you. So, my original statement was correct: you really don't know if or what BCN would pay you back in the event of a bunch of defaults.

 

[KimMH]

oh dear. you have to ask?

 

[Lindley]

No risk?! This is essentially what they did with risky mortgages, made them into investment "opportunities". The people who sell the mortgages initially make money. The people who make them into investments make a commission. But, they're bad investments in the long run and those who are invested in them get reamed in the end and there were lots of really bad mortgages. We all know how *that* ended up!

Well, that's certainly true. I hadn't thought of it from that perspective.

 

[tharpdevenport]

Lindley, good news -- I got an e-mail from Waafa Mustafa. His dearly departed father, the Nigerian king, has left you a bunch cash. Contact him urgently!

Also, you've won the UK lottery.

 

[Lindley]

Oh, really? But I didn't even------hey.....