Re:Taxi Medallions: New York's taxi system makes fares highe...
by MichaelGG on Sunday June 10, 2012 @02:04AM
(#4090313)
If it's really so risk-free, then others would provide competition with lower rates, less down, payment-free period, etc.
Re:Taxi Medallions: New York's taxi system makes fares highe...
by smsm42 on Sunday June 10, 2012 @05:25AM
(#4090608)
For that, they have first to get a supply of medallions. And current owners won't sell them unless they are given some serious money to replace that 5.5%-0.35% income stream. One of the reasons why the price of medallions skyrockets.
Of course, I imagine it's not completely risk-free. It is a strictly regulated business. Which means you need a lot of friends in key places - otherwise somebody who does have a lot of friends would put you out of the lucrative business and take it for himself.
And there's some measure of competition - 5.5% is not a super-high for a loan with a collateral. Higher than mortgage rates but substantially lower than unsecured loan rates. About 1% over common HELOC rates and about the same as home equity loan rates. Of course, repossessing a home is much harder than repossessing a medallion, so probably medallion business is better, but the rate is not totally outrageous compared to similar loans.
“If a borrower doesn’t pay, we send out somebody,” Murstein said. “Literally, they can pop the medallion off the hood of the car and bring it back to our office and, bingo, the guy is out of work.” "
He basically has no risk on his end. Looks like he found a pot of gold!