Dealers - do you buy coins with borrowed money?

Comments

• RYK Posts: 35,800 ✭✭✭✭✭

  October 22, 2006 11:48AM

  From what I have heard and read, many dealers do quite a bit of financing. One common method is the 45-day 1% loan from Heritage. If I understand it correctly, dealers may pay for their Heritage auction purchases with a check written for 1% more than their invoice total and dated 45 days from the date of the sale.

  My Box of 20: https://pcgs.com/setregistry/collectors-showcase/box-20/ryks-gold-box-20/17132

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• Barry Posts: 10,100 ✭✭✭

  October 22, 2006 12:08PM

  
  
  << <i>From what I have heard and read, many dealers do quite a bit of financing. One common method is the 45-day 1% loan from Heritage. If I understand it correctly, dealers may pay for their Heritage auction purchases with a check written for 1% more than their invoice total and dated 45 days from the date of the sale. >>
  
  
  
  I'm not sure if that's good or bad. Do the coins ship immediately or only after payment? I'm just a lowly collector and ANR ships to me immediately and sends the invoice with the coin(s). The others don't ship to me until paid.
  
  If they do ship immediately, it works out to 8% (or so) per annum, based on date of sale. However, if you consider most invoices are net 30, then it's actually 24% for the 15 days. But if Heritage doesn't ship until paid, then it considerably longer until the dealer can sell the coin and recoup his investment.
  
  I think I'm confusing myself...

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• Flyfishguy Posts: 333

  October 22, 2006 12:14PM

  We're a small/mid size shop. I try to keep $40-$50K in ready funds available. I also have a substantial credit line at the bank. If I have to borrow money to buy it, I need it gone within 30 days.

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• LincolnCentMan Posts: 5,347 ✭✭✭✭

  October 22, 2006 12:39PM

  I bought a 89-CC in NGC AU55PL on the credit card one time from very well known internet dealer. It was a quick flip for a 2K profit. I had the check from the buyer before the credit card bill came in.
  
  I would NOT recommend doing this. I had plenty of liquidity if I needed to cover the coin if it hadnt have sold. For me, it was a no-brainer buy.
  
  David

  Lincolncentman Toned Lincolns

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