Capital Solutions
Deal Of The Week
Customer has a lawsuit to use for collateral
The Problem: Customer Wanted To Purchase A Truck But Didn't Have Other Trucks Or Real Estate For Additional Collateral
As you know we require additional collateral from a customer in order to approve them for financing. This is usually in the form of other trucks, heavy equipment, or real estate. This customer didn't have anything like that to put up. Here were the problems on the deal:
- Customer had a credit score of 550. Our dealer had no where else to take the deal
- Customer had only been in business for about a year. He was driving his uncles truck
- In addition to the low credit score he also had a open tax lien for $12,000. He was on a payment arrangement with the IRS but it was still showing open on the credit report
How many customer do you see like this? If he had other free and clear trucks or other collateral it would have been much easier to put it together. We had to dig a little deeper.
The Solution: Customer Was Receiving Money Through A Lawsuit
After interviewing the customer we found out he had been in an accident and was suing the person causing the accident. We than called his attorney and determined we could use his position in the lawsuit as additional collateral. Here's how it worked:
- The lawsuit was in the later stages. The attorney knew the case would go his clients way and it was going to take about six months to complete
- We paid the attorney to write up an assignment to the lawsuit. This acted as our additional collateral
- We were able to fund the transaction with no money down
This type of deal works very quickly. All that's needed is the assignment from the attorney. This isn't very common but it illustrates how flexible we can be.
At Capital Solutions our success is based on your success.