Enjoy 7 Complimentary Course Videos

Experience our "learn by doing" instructional approach.

Simulated Deal Premise:  

  • We play the role of an investor - Golden Sun Advisors.
  • Together, we evaluate buying a pool of auto loans with a 12% interest rate from a FinTech Auto Loan Originator.
  • We need a +10% return -  & quickly learn buying unlevered auto loans doesn't get us there!
  • We use securitization to create a deal that works and gain perspectives from:
    • For Securitization Equity Investors (the class) meeting a +10% return hurdle, 
    • Lenders (Debt Providers), &
    • The FinTech Originator selling us the auto loans.
  • Topics / Skills:  Deal process and parties; using leverage to boost returns, bk-remote / non-recourse financing / SPVs, building a auto loan cash model, modeling securitization waterfall, historical static pool analysis and creating assumption curves, term sheets, optimizing structure, mitigating risk with triggers / target advance rates, and much more!

Videos By Topic

PROJECT OVERVIEW
EXCEL MODELING
NEGOTIATIONS

Project Overview

Email from Boss, Teaser, Plan of Attack

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Are you up for the challenge?

  • Our boss gives us a 5 hour deadline to analyze the merits of an auto loan investment.  
  • We're sitting on $10mm of cash that needs to be to put to work.
  • Targeting at least 10% return.
  • JC Marlin - the broker showing us the deal - provides us a "Teaser" to buy auto loans originated by a FinTech Lender.

Excel Modeling Excerpts

Cash Flow Profile of an Auto Loan

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Cash-in, cash-out.

  • Visualize the cash flow profile of an auto loan investment
  • Understand the three key components of cash flow: cash deployed, cash received, and timing
  • Discover how to  monthly payments on auto loans are sized and interest and principal.

Excel: Calculating Monthly Payment of an Auto Loan

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Using the PMT function + avoiding common mistakes

  • Follow along as we input auto loan terms into Excel
  • Recognize the importance of adjusting the interest rate to account for Auto Loan's monthly payments
  • Troubleshoot errors to arrive at the correct payment.

Excel: Calculating the Loan Amortization Schedule

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The first component of our securitization model

  • Properly setting up excel with headers & loan details inputs.
  • Allocating PMT cash flows to interest and principal for each month
  • Verify that the amortization schedule works by arriving at a $0 balance at the end of the loan term

Negotiations & Intro To BK Remote Lending Structures

Email to Broker - these returns look too low!

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IRR vs. Loan Price Sensitivity

  • At a 105 price and 3% servicing, we find returns are only ~7%  - and that's if the borrower makes all its payments on time.
  • Using our newly created auto loan cash flow model, we calculate our returns at 104 price, 103, 102, etc.
  • We summarize our findings and in email back to the broker.

"We'd never lend to you!"  Why Lending to SPVs makes sense.

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How to Separate  Risks from the Parent Company

  • Special Purpose Vehicle (SPV) Overview
  • Benefits to borrower (buyer of auto loans)
  • Benefits to the Lender

Your bankruptcy is not our problem.

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Learn How Structuring ABS Debt Protects Lenders and Borrowers

  • Key concepts of bankruptcy remote financing 
  • Overview of relationship between ABS debt, ABS equity, and residual certificates

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