I’m seeking some clarity on what is generally considered a good yield for a performing auto note. What benchmarks or rates are typically seen as acceptable in this context? Any insights or data on performance standards would be appreciated.
A truly good yield on a performing auto note can vary based on the note’s terms, credit quality, and current economic conditions, but you’re typically looking at something in the neighborhood of 10-15% annually if you’re investing directly rather than through a bank or similar institution. The catch is that yields in this range often require a deeper dive into the underlying risk, including borrower credit histories and collateral quality. Even with a note performing, you still have to factor in contingencies like servicing fees and drop-offs due to minor defaults, so it’s best to analyze the note’s complete risk profile before settling on a target yield.
I’ve seen folks mention that for a performing auto note, yields around 10-15% are often considered good, but honestly it really depends. I mean, if the auto note is really rock-solid in terms of borrower credit and the collateral holds up, some might say even slightly lower yields are acceptable because the risk is lower. But on the flip side, if you’re pushing for higher yields, you might want to expect a bit more scrutiny on the details. It’s been my experience that you really need to balance the yield with how the note’s structured overall – not every note that hits 12% is a sure thing. So, while 10-15% seems to be a common ballpark figure, I’d advise anyone looking into it to dig into the specifics to be comfortable with the risk they’re taking on.
I’ve been following this space for a while and it seems that while the 10-15% range is still a common benchmark, there are signs things are shifting a little. Auto note investors are now weighing in more on how factors like stricter regulatory environments and shifting repo trends affect risk, and because of that, some are beginning to accept yields in the high single digits if the note quality is really strong. It’s interesting because some lenders are moving towards slightly lower yields when they’re confident in borrower credit and vehicle value, especially now as interest rate fluctuations and tighter underwriting standards force a more nuanced approach. I find that today’s market really demands you look beyond the headline yield and dive into the full risk profile before making a call. It feels like the factors in play are becoming as important as the yield itself 
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When assessing a performing auto note, yield isn’t the only metric; it’s necessary to understand the risk profile behind the numbers. In my experience, yields in the 12-17% range can be attractive if the borrower’s credit and the collateral value are sound. However, it’s not just about the headline yield. You need to consider factors like servicing fees, potential downturns in asset values, and regional market specifics. Do your due diligence on the note’s structure and performance record; a slightly lower yield may be more sustainable if it aligns with a stronger credit foundation and lower overall risk.