Alpaca Note
Q.
How does it work?
A. You
would sell your Alpaca with owner financing for some specific period, at a
specified interest rate. You would then assign the created note(sales
agreement) to me for a certain price, which would depend on the length of the
note, the quality of the collateral(Alpaca), and the interest rate you
specified in the original note, among other things.
Q.
What do you require from me when I sell you my note?
A. I would
require a signed sales agreement between you and the buyer, which clearly
spells out the financing terms, i.e. interest rate, term, amount financed,
description and registration number of animal being financed, etc. This
agreement must also contain an assignment clause as well as a substitution
of collateral clause. The assignment clause
should direct that the note has been transferred to me, and be signed and dated
by the seller(s). I would also require the animals registration be transferred
to me, and that full mortality insurance be put on the animal with myself as
co-beneficiary for the duration of the contract. Essentially, I would require
all the things you would insist on if you intended to carry the contract
yourself.
Q.
Why should I sell you this note instead of holding it myself for the whole
term?
A. Selling
the note would allow you to recoup your cash immediately, and make the funds
available for other purposes. This would also give you an opportunity to
offer your animals at favorable/affordable financial terms to your prospective
buyers, while allowing you to get your cash out immediately. This could be a very
important marketing tool when selling your animals.
Q.
What could I expect to net for my note if I sold it to you?
A. That
would depend, again, on the duration of the note; the collateral; the interest
rate; and the credit-worthiness of your buyers. But generally you could expect
to net 80 90 % of your current note face value.
Q.
Why do you discount the note?
A. Because
Im willing to hold the note for the duration of the contract and accept small
payments every month, and the consequent potential for problems of collection
and default, but want to be compensated for it. To accomplish this I will
discount the note according to my analysis of
the risk/benefit ratios.
Q.
Am I still responsible for technical/husbandry support to the buyers if you buy
my note?
A. Yes.
While I am reasonably knowledgeable about Alpaca care and husbandry, I would
not know this particular animal. Any agreements made between you and the buyers
would still be in force, just as if you had sold the animal for cash. This would
be similar to what happens when you buy a new car from a dealer. Your bank may
handle the financing, but your dealer still services the car and administers
any
warrantees.
Q. What
happens if the animal I sold has to be taken back by me and a replacement
furnished to my buyers because of medical/reproductive issues covered in
the sales contract?
A. In this
case, the original sales document would be modified to accept this substitution
of collateral, and the original registration returned to you by me, to
be replaced by the registration for the animal you have just given to your
buyer.
Q.
How quickly would I get my cash back?
A.
Assuming all the paperwork was in order, you would get a check from me immediately.