Commercial radio stations are targeting investors who can afford to sink £13,500 into buying a car which is then leased to a driver with a poor credit history who cannot find finance elsewhere.
The company behind the scheme, Buy2LetCars, claims a minimum investment of £13,500 will generate thousands of pounds for an investor.
Explaining how the scheme works, the company says the investor picks up £250 a month in lease payments for 36 months and then in the next month a £8,955 lump sum, giving a 36% yield over the three years.
The firm says 300 investors have put money into the deal so far, but as the investment has only run for two years, cannot provide any case studies to show anyone has picked up the end of term bonus payment.
The cars, mainly Hyundai i30 Actives, are leased out to drivers who have poor credit histories and are rejected by other car finance companies.
The investment is protected by a GPS tracker on the vehicle and a remote deactivation switch that immobilises the vehicle if the driver tries to make off with the car or fails to pay lease instalments on time.
The firm told The Guardian that although a secondhand Hyundai Active is worth around £5,000, the £8,955 payment is guaranteed from other sources ' such as kickbacks from dealers from providing volume business.
Issues that investors need to consider before parting with their cash include concerns that the transaction is not protected by the Financial Services Compensation Scheme and if any dispute arises, a complaint cannot be raised with an ombudsman.
Who owns the car if the buy to let car firm goes bust is also a grey area ' the company holds the registration, which they say stops parking tickets and speeding fines going against the investor?s record.
Article courtesy of LandlordZONE