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I came across this little company a couple of years ago, when a young relative purchased a used car from a dealer. He obtained financing through them, which is designed as auto loans for risky credit borrowers. Personally, I think some of the terms are a little antiquated in days when people with the best of credit ratings can find themselves in financial trouble overnight with a job loss or illness, but it is what it is.......

The company is called Carfinco and is listed on the TSX as cfn.un

They borrow money at an approximate rate of 15% and charge 30% annually on car loans. According to some analysis, they have a 50% return on capital.

The vehicles secure the loans, and they install a GPS unit and have the ability to shut down the vehicle if they are not paid. Still, they suffered a default rate of 7% last year, but it normalized at 4% lately.

At the time, I could have purchased the stock for about 40 cents per share. It is now listed around 5.00 a share and has paid 4 -6% dividends as well. They also paid out a surprise dividend payment earlier this year.

I'm not smart enough to recommend stocks, but this could be interesting for anyone who has some money to risk and is looking for something to invest in.

A look at the stock chart shows a metoric rise, and it would appear that business is good and getting better.

I wonder if the success of small niche finance companies like this aren't eating into the profits of the big banks. TD Canada Trust did recently purchase a subprime lender to go after some of the business, but the others don't seem to mind all the business that is being siphoned off.

I think this company is one that shows the signs of the times.

As always, perform your own due diligence.

http://www.theglobeandmail.com/globe-investor/markets/stocks/summary/?q=CFN.UN-T
 

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Although you never know whether those extra dividends are a good sign or a bad sign. Atlhough none the less it would have been a killing if you had picked it up at 5 cents! Although I guess **** happens :p and maybe it could grow even more. Does look like an interesting way of conducting business tho. Although you should watch the company based on the fact that it has a decently high amount of liabilities compared to assets.
 

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Although you never know whether those extra dividends are a good sign or a bad sign. Atlhough none the less it would have been a killing if you had picked it up at 5 cents! Although I guess **** happens :p and maybe it could grow even more. Does look like an interesting way of conducting business tho. Although you should watch the company based on the fact that it has a decently high amount of liabilities compared to assets.
The way to do this is to go in quickly and after seeing profit, get out quickly,..... and then be satisfied with what you made, don't look back and think you sold off too early,....
 
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