Thoughts on TFS IncomeDriver Notes

[Horseshoez]

Hello to the collective here.

Last fall I financed a new Toyota Tacoma through Toyota Financial Services (TFS) with an interest rate of 2.49% for 48 months; my reasoning for financing instead of just paying cash for the Tacoma was pretty simple, I figure I'd be losing money by not taking advantage of such a low interest rate.  Today I was doing a deeper dive into the TFS web site and saw a link titled "IncomeDriver Notes"; said link brought me to a TFS investment vehicle which, at the moment at least is paying 4.5% interest.

While I'm betting the market at large will perform better than that rate of return, it seems like kind of a no-brainer to put at least some money, say the outstanding value of my Tacoma, into those Notes, kinda-sorta as a hedge.  Thoughts?

[Anonymous]

It's probably OK but not sure why that would be a great choice.   There are money market/HYSA paying more, and certainly plenty of 1 year CDs paying above 5% (and there the rate is guaranteed)   Is there some advantage of the IncomeDriver notes?

[Horseshoez]

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@Anonymous wrote:

It's probably OK but not sure why that would be a great choice.   There are money market/HYSA paying more, and certainly plenty of 1 year CDs paying above 5% (and there the rate is guaranteed)   Is there some advantage of the IncomeDriver notes?

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Not sure about money markets, but relative to CDs, the "Notes" offer virtually instant access to your money.

[Anonymous]

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@Horseshoez wrote:

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@Anonymous wrote:

It's probably OK but not sure why that would be a great choice.   There are money market/HYSA paying more, and certainly plenty of 1 year CDs paying above 5% (and there the rate is guaranteed)   Is there some advantage of the IncomeDriver notes?

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Not sure about money markets, but relative to CDs, the "Notes" offer virtually instant access to your money.

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OK, so that's like HYS and Money Market.  If you look at Money Market Account Rates in April 2023 | DepositAccounts  it goes above 5%, but given your minimalist credit card approach, and depending on the sum, you may find keeping with one lender worth the lower rate vs opening a new savings account.

[sccredit]

For 4.5% I would take an FDIC insured HYSA vs investing in Toyota auto loans that carry no insurance. While the chances TFS would go belly up are very slim it is not a high enough interest rate to justify any risk IMO.