Selling the whole note is one option among several. You can keep it, sell only some of the payments in a partial purchase, borrow against it, accept an early payoff from the borrower, or help the borrower refinance. Which fits depends on how much cash you need, how soon, and whether you want the risk of the note off your hands.
Most people who search for a note buyer have a reason behind it: a bill, a purchase, a move, an estate to settle, or simply being tired of collecting. The reason decides the answer more than the note does. Someone who needs $30,000 for a roof does not have to sell a $100,000 note to get it.
The options at a glance
| Option | Cash now | Future payments | Risk of the payer stopping | Who has to agree |
|---|---|---|---|---|
| Keep the note | None | All yours | Stays with you | Nobody |
| Partial purchase | Some | Return to you after the sold payments | Shared, depending on the terms | You and the buyer |
| Borrow against the note | Some | Yours, but pledged to the lender | Stays with you, plus a loan to repay | You and the lender |
| Discounted early payoff | All, less the discount you give | None | Ends | You and the borrower |
| Borrower refinances | All, usually at full payoff | None | Ends | The borrower and a new lender |
| Full sale | All, less the buyer’s discount | None | Passes to the buyer | You and the buyer |
A worked comparison
Illustrative example. Round numbers; your own note will differ.
Your note has $100,000 owed at 7%, with 240 monthly payments of about $775 left. A buyer who wants a 10% yield would pay roughly $80,300 for the whole note. Yield is the yearly return the buyer earns on the money it pays you, and the gap between the balance and the price, here about $19,700, is the discount. Whether that discount is worth paying to clear other debt is covered in selling a note to pay off debt.
- Partial purchase of the next 60 payments: at the same 10% yield, roughly $36,500. After five years, the remaining 180 payments come back to you.
- Borrowing against the note: a lender might lend part of the balance, say $50,000, at its own rate. The $775 a month keeps coming to you, and some or all of it goes to repay the loan.
- Discounted payoff: the borrower offers $92,000 to settle the $100,000 balance now. You give up $8,000 and the note ends.
- Keeping it: 240 payments of $775, about $186,000 in total, collected over 20 years if the payer keeps paying.
None of these figures is a quote. They show the shape of the trade: the more cash you want today, and the further out the payments you sell, the more you give up.
Keep the note
If you do not need the money, keeping a note that pays on time is often the best result. It pays interest every month, and you are not paying a buyer’s discount. If the work is what wears on you, a loan servicing company can collect payments, keep records and send year-end statements for a monthly fee. See what a note servicing company does.
The cost of keeping it is the risk. If the payer stops, you deal with it. A note that is fine today is worth reviewing each year, because a sale is easiest while the payments are current.
Sell only part of it: the partial purchase
In a partial purchase a buyer pays you for a set number of upcoming payments, or a share of each payment, and the note returns to you afterwards. Because buyers discount far-off payments the hardest, a partial usually gives up less in total than a full sale for each dollar you receive. It suits a defined need: a set amount for a set purpose.
The trade-offs are that you receive less cash than a full sale and you get the note back later, with whatever risk it carries then. Partials also need a payer with a solid record, since the buyer is depending on those particular payments.
Borrow against the note
Some lenders will lend against a note, holding it as collateral. This is sometimes called hypothecation. You keep ownership and the payments, and you owe the lender a loan with its own rate and terms. If the payer stops paying, you still owe the loan.
Lenders who do this are fewer than note buyers, and they lend only part of the balance. For a direct comparison, read partial sale vs borrowing against your note.
Let the borrower pay off early
Sometimes the borrower is the best buyer of all. A borrower with savings or an inheritance may pay off the note in full, or offer a lump sum below the balance to end it early. A discounted payoff is like selling the note at a discount, except the buyer is the person who owes it, and there is no third party checking the file. Compare the borrower’s figure with what a note buyer would pay, and see whether to accept an early payoff at a discount.
A related route is to sell the note back to the borrower on agreed terms, with the lien released at closing.
Help the borrower refinance
If the borrower’s credit or income has improved, or the property has gained value, a bank or credit union may lend them enough to pay you off in full. You can raise it with them, or offer a small incentive such as waiving a late fee or a prepayment charge your note allows. The decision is the borrower’s, and you cannot force it unless your note has a balloon payment or a call date. A refinance pays the full payoff amount, so it usually beats any sale, but it depends on someone else’s lender.
When a full sale is still the right answer
A full sale makes sense when you want all of the cash and none of the risk: an estate that must be divided, a payer whose record is slipping, or a holder who simply wants to be done. It also makes sense when the other routes are closed, for example when the borrower cannot refinance and no lender will take the note as collateral.
If you are weighing the two, read should I sell my note or keep it. When you ask us to price a note, we can show the full sale and a partial side by side, so the trade between cash now and payments kept is in front of you. A quote is free and carries no obligation, and keeping the note is an acceptable outcome. To see the numbers on yours, send us the note to price.
Related questions
What is the cheapest way to raise cash from a note?
It depends on how much you need. A partial purchase of a few years of payments usually gives up less than a full sale for the cash raised, and a borrower refinance pays the full payoff if the borrower can qualify.
Can I borrow against my note instead of selling it?
Some lenders lend against a note held as collateral. You keep the payments and owe the loan, and you still carry the risk if the payer stops paying.
Should I accept a discounted payoff from my borrower?
Compare the borrower's figure with what a note buyer would pay for the note as it stands. If the payoff is higher and you want the cash, it is often the better deal, since no buyer's discount applies.
Is keeping my note a reasonable choice?
Yes. If you do not need the cash and the payer pays on time, keeping the note avoids any discount. A servicing company can take over collection if the work is the problem.