Any experience with Toyota Income Driver Notes?

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grayparrot
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Any experience with Toyota Income Driver Notes?

Post by grayparrot »

I understand that these are senior unsecured debt, but available essentially on-demand so free of interest rate risk. The current rate of 1.5% is obviously very attractive in the current environment. Has anybody had experience with the platform, reliability of access to funds, etc?
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Stinky
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Re: Any experience with Toyota Income Driver Notes?

Post by Stinky »

grayparrot wrote: Sun Feb 14, 2021 8:21 pm I understand that these are senior unsecured debt, but available essentially on-demand so free of interest rate risk. The current rate of 1.5% is obviously very attractive in the current environment. Has anybody had experience with the platform, reliability of access to funds, etc?
I have no experience with these, but I'm interested in the opinions of others.

It's interesting that Toyota Motor Credit Corporation is choosing to fund some of their financing needs through direct-lending from individuals, rather than issuing corporate debt or using commercial paper.

I'd definitely want to know if these notes have a rating from a major rating agency - and if so, what it is. I'd also like to know the ratings, if any, of TMCC's other debt.
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talzara
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Re: Any experience with Toyota Income Driver Notes?

Post by talzara »

grayparrot wrote: Sun Feb 14, 2021 8:21 pm I understand that these are senior unsecured debt, but available essentially on-demand so free of interest rate risk. The current rate of 1.5% is obviously very attractive in the current environment. Has anybody had experience with the platform, reliability of access to funds, etc?
The prospectus is dated January 22, 2021. It's brand new.
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Re: Any experience with Toyota Income Driver Notes?

Post by talzara »

Stinky wrote: Mon Feb 15, 2021 9:13 am I'd definitely want to know if these notes have a rating from a major rating agency - and if so, what it is. I'd also like to know the ratings, if any, of TMCC's other debt.
Since these are unsecured senior notes, you'd use TMCC's overall credit rating. Toyota Motor Credit Corporation is rated A+ by Fitch.
MishkaWorries
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Re: Any experience with Toyota Income Driver Notes?

Post by MishkaWorries »

talzara wrote: Mon Feb 15, 2021 3:24 pm
Stinky wrote: Mon Feb 15, 2021 9:13 am I'd definitely want to know if these notes have a rating from a major rating agency - and if so, what it is. I'd also like to know the ratings, if any, of TMCC's other debt.
Since these are unsecured senior notes, you'd use TMCC's overall credit rating. Toyota Motor Credit Corporation is rated A+ by Fitch.
With that high of a credit rating, wouldn't Toyota be able to borrow money at a much lower rate than 1.5%? What's the catch here?
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

For demand notes, Toyota's 1.5% is quite a bit higher than Ford's 0.85% and Mercedes' 1.1%.

Short discussion on ER forum

https://www.early-retirement.org/forums ... 07236.html
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talzara
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Re: Any experience with Toyota Income Driver Notes?

Post by talzara »

MishkaWorries wrote: Mon Feb 15, 2021 3:37 pm With that high of a credit rating, wouldn't Toyota be able to borrow money at a much lower rate than 1.5%? What's the catch here?
An A+ rated company should be able to borrow at less than 1.5%, and it can also lock in the low rates for many years.

Toyota may just be trying to diversify its funding sources. Deposits usually don't dry up as quickly as the bond markets. It's the same reason that Ally got into banking to fund its car loans, but Toyota doesn't have the overhead of running a bank.
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Re: Any experience with Toyota Income Driver Notes?

Post by retired@50 »

MishkaWorries wrote: Mon Feb 15, 2021 3:37 pm
talzara wrote: Mon Feb 15, 2021 3:24 pm
Stinky wrote: Mon Feb 15, 2021 9:13 am I'd definitely want to know if these notes have a rating from a major rating agency - and if so, what it is. I'd also like to know the ratings, if any, of TMCC's other debt.
Since these are unsecured senior notes, you'd use TMCC's overall credit rating. Toyota Motor Credit Corporation is rated A+ by Fitch.
With that high of a credit rating, wouldn't Toyota be able to borrow money at a much lower rate than 1.5%? What's the catch here?
My guess is that somebody has to take the hit when someone stops making car payments... Who? Toyota or the person who purchased an unsecured senior note? Has anyone found the prospectus online or linked it?

ETA:
From the prospectus:
The risks described below are intended to highlight risks that are specific to the Notes, but are not the only risks that we face. Additional risks, including those generally affecting our business and the industry in which we operate, risks that we currently deem immaterial and risks generally applicable to companies in our industry, may also impair our business, the value of your investment and our ability to pay interest on or redeem the Notes.
As always, risk and return are linked.

Regards,
Last edited by retired@50 on Mon Feb 15, 2021 4:58 pm, edited 1 time in total.
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TallBoy29er
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Re: Any experience with Toyota Income Driver Notes?

Post by TallBoy29er »

Prospectus:
https://www.incomedrivernotes.com/conte ... pectus.pdf

General Webpage:
https://www.incomedrivernotes.com/en.html


General terms at the top of the prospectus:

The Toyota Motor Credit Corporation Variable Denomination Floating Rate Demand Notes, marketed and sold as the Toyota
Financial Services “IncomeDriver Notes” (the “Notes”), are designed to provide investors with a convenient means of investing funds
directly in Toyota Motor Credit Corporation (“TMCC”). Toyota Financial Services is a servicemark of TMCC. The Notes will have
the following terms:
 The Notes have no stated maturity.
 The Notes are subject to repayment at an investor’s
demand at any time.
 The Notes are subject to redemption by TMCC at any
time.
 The Notes earn a floating rate of interest that is
determined from time to time by TMCC in its sole
discretion.
 The initial interest rate applicable to the Notes and all
subsequent changes to the interest rate will be disclosed in
pricing supplements filed with the Securities and
Exchange Commission.
 Interest on the Notes will accrue and be compounded
daily and be automatically reinvested on the last business
day of each month.
 The Notes are issuable in any amount, subject to a
minimum initial investment for any one Note of $500
and a maximum outstanding investment for any one Note
of $100,000,000.
 The Notes will be unsecured unsubordinated obligations
of TMCC.
 The Notes are in book-entry form only.
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Re: Any experience with Toyota Income Driver Notes?

Post by SpaceCowboy »

I just signed up for these. I’m currently using MBFS Demand Notes, but their interest rate has steadily declined to 1.10% now. Thus, the Toyota ones are a much better deal at 1.50%.
I’m wondering why I never heard about them before. Saw them on the ER Forum too.
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Re: Any experience with Toyota Income Driver Notes?

Post by elderwise »

Not an expert here on unsecured debt or ETN, but if if one is willing to buy these debt notes how is it logistically different from buying an ETN note of FNGU That is a etn note issued by Bank Of Montreal consisting of faang stocks plus baba and Baidu.

Etn is also unsecured debt that pays no dividend but jusr run PF on this thing, granted 2020 was crazy and it also does also have 10% tesla in addition to faang..

Why not this? Isn't it better than 1.5% measly interest especially since both fngu and Toyota notes are unsecured.

Hope someone can throw some more light on this equation
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

elderwise wrote: Sat Feb 20, 2021 5:57 am Not an expert here on unsecured debt or ETN, but if if one is willing to buy these debt notes how is it logistically different from buying an ETN note of FNGU That is a etn note issued by Bank Of Montreal consisting of faang stocks plus baba and Baidu.

Etn is also unsecured debt that pays no dividend but jusr run PF on this thing, granted 2020 was crazy and it also does also have 10% tesla in addition to faang..

Why not this? Isn't it better than 1.5% measly interest especially since both fngu and Toyota notes are unsecured.

Hope someone can throw some more light on this equation
Putting the credit risk aside, FNGU is subject to daily price fluctuations while that from Toyota is not.
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Re: Any experience with Toyota Income Driver Notes?

Post by Stinky »

Bumping this thread to gather more input.

I’ve signed up for a new account with a nominal amount of funding to see how it goes. Process is smooth so far.
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Re: Any experience with Toyota Income Driver Notes?

Post by elderwise »

indexfundfan wrote: Sat Feb 20, 2021 10:20 am
elderwise wrote: Sat Feb 20, 2021 5:57 am Not an expert here on unsecured debt or ETN, but if if one is willing to buy these debt notes how is it logistically different from buying an ETN note of FNGU That is a etn note issued by Bank Of Montreal consisting of faang stocks plus baba and Baidu.

Etn is also unsecured debt that pays no dividend but jusr run PF on this thing, granted 2020 was crazy and it also does also have 10% tesla in addition to faang..

Why not this? Isn't it better than 1.5% measly interest especially since both fngu and Toyota notes are unsecured.

Hope someone can throw some more light on this equation
Putting the credit risk aside, FNGU is subject to daily price fluctuations while that from Toyota is not.
You are absolutely right, like today itself was a good example from $43 it went to $30 over a few days, but over a long term (not a day / or month) it seems to HAVE performed much better than a paltry 1.05% by magnitudes..
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

elderwise wrote: Tue Feb 23, 2021 2:56 pm
indexfundfan wrote: Sat Feb 20, 2021 10:20 am
elderwise wrote: Sat Feb 20, 2021 5:57 am Not an expert here on unsecured debt or ETN, but if if one is willing to buy these debt notes how is it logistically different from buying an ETN note of FNGU That is a etn note issued by Bank Of Montreal consisting of faang stocks plus baba and Baidu.

Etn is also unsecured debt that pays no dividend but jusr run PF on this thing, granted 2020 was crazy and it also does also have 10% tesla in addition to faang..

Why not this? Isn't it better than 1.5% measly interest especially since both fngu and Toyota notes are unsecured.

Hope someone can throw some more light on this equation
Putting the credit risk aside, FNGU is subject to daily price fluctuations while that from Toyota is not.
You are absolutely right, like today itself was a good example from $43 it went to $30 over a few days, but over a long term (not a day / or month) it seems to HAVE performed much better than a paltry 1.05% by magnitudes..
The Toyota Demand Notes behaves more like a money market fund (albeit with more risk), whereas FNGU behaves like a 3x leveraged equity fund. It seeks the "return linked to a three times leveraged participation in the daily performance of the NYSE FANG total return Index". "The index is an equal-dollar weighted index designed to represent a segment of the technology and consumer discretionary sectors consisting of highly-traded growth stocks of technology and tech-enabled companies."

Comparing the Toyota Demand Notes with FNGU is comparing apples and oranges. One behaves like a money market fund, and the other is a 3x leveraged equity fund.
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Re: Any experience with Toyota Income Driver Notes?

Post by MishkaWorries »

With the market down across the board today, I did some tax loss harvesting for the first time. More for practice and fun than anything else.

It was super easy at Schwab. I just did specific ID and went through and sold the highest costs funds. It looks like there is an even easier way with the option to sell the highest cost basis lots first.

I sold a small position in our bond fund at a loss and opened a Toyota Income Note account. Opening the account was easy. We'll see how the transfer of money goes after the brokerage account settles.
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Re: Any experience with Toyota Income Driver Notes?

Post by Stinky »

Stinky wrote: Sun Feb 21, 2021 7:41 am Bumping this thread to gather more input.

I’ve signed up for a new account with a nominal amount of funding to see how it goes. Process is smooth so far.
My first nominal funding has gone in. Balance showed up as expected online. Also got a letter in the mail with my full “note number” (not visible on the website).

I initiated a second, larger transfer yesterday. The money left my checking account today. I expect that it will show up on the Toyota site tomorrow.

So far so good.
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

Stinky wrote: Thu Feb 25, 2021 4:27 pm
Stinky wrote: Sun Feb 21, 2021 7:41 am Bumping this thread to gather more input.

I’ve signed up for a new account with a nominal amount of funding to see how it goes. Process is smooth so far.
My first nominal funding has gone in. Balance showed up as expected online. Also got a letter in the mail with my full “note number” (not visible on the website).

I initiated a second, larger transfer yesterday. The money left my checking account today. I expect that it will show up on the Toyota site tomorrow.

So far so good.
Interesting. If you don't mind, what is the speed of their transfer system?

Transfer submitted online : T+0
Money debited from linked bank : T+1
Money credited : T+2 ?
Money available : T+??
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Re: Any experience with Toyota Income Driver Notes?

Post by Stinky »

indexfundfan wrote: Fri Feb 26, 2021 7:05 am
Stinky wrote: Thu Feb 25, 2021 4:27 pm
Stinky wrote: Sun Feb 21, 2021 7:41 am Bumping this thread to gather more input.

I’ve signed up for a new account with a nominal amount of funding to see how it goes. Process is smooth so far.
My first nominal funding has gone in. Balance showed up as expected online. Also got a letter in the mail with my full “note number” (not visible on the website).

I initiated a second, larger transfer yesterday. The money left my checking account today. I expect that it will show up on the Toyota site tomorrow.

So far so good.
Interesting. If you don't mind, what is the speed of their transfer system?

Transfer submitted online : T+0
Money debited from linked bank : T+1
Money credited : T+2 ?
Money available : T+??
You got the first three items correct.

Money is credited, but not yet available, on T+2. I will check daily and post back when it is available.

Once this deposit cycle is fully finished, I will do a small withdrawal and post results.
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Re: Any experience with Toyota Income Driver Notes?

Post by TallBoy29er »

Stinky wrote: Fri Feb 26, 2021 8:09 am
indexfundfan wrote: Fri Feb 26, 2021 7:05 am
Stinky wrote: Thu Feb 25, 2021 4:27 pm
Stinky wrote: Sun Feb 21, 2021 7:41 am Bumping this thread to gather more input.

I’ve signed up for a new account with a nominal amount of funding to see how it goes. Process is smooth so far.
My first nominal funding has gone in. Balance showed up as expected online. Also got a letter in the mail with my full “note number” (not visible on the website).

I initiated a second, larger transfer yesterday. The money left my checking account today. I expect that it will show up on the Toyota site tomorrow.

So far so good.
Interesting. If you don't mind, what is the speed of their transfer system?

Transfer submitted online : T+0
Money debited from linked bank : T+1
Money credited : T+2 ?
Money available : T+??
You got the first three items correct.

Money is credited, but not yet available, on T+2. I will check daily and post back when it is available.

Once this deposit cycle is fully finished, I will do a small withdrawal and post results.
Thanks for the updates. Thinking of doing this myself, it's good to know someone else's experience.
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

There is a similar product from Dominion Energy. But unlike the one from Toyota, this one gives you the ability to write checks.

1.25% : less than $10k
1.35% : $10k to $50k
1.50% : $50k or more

https://investors.dominionenergy.com/fi ... fault.aspx

I believe Dominion Energy corporate has a lower credit rating compared to Toyota.
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tbradnc
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Re: Any experience with Toyota Income Driver Notes?

Post by tbradnc »

Getting money in seems to be easy.

Hopefully getting it out will be too. I've moved a small amount to test the waters.
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Re: Any experience with Toyota Income Driver Notes?

Post by lazynovice »

These are Variable Rate Demand Notes. There are also Variable Rate Demand Bonds on the municipal side if you are looking for a tax exempt option. I prefer to stick with bond index funds where my risk is diversified across many companies rather than just one.

https://www.wsj.com/articles/car-maker- ... 1605781801
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Re: Any experience with Toyota Income Driver Notes?

Post by Zosima »

talzara wrote: Mon Feb 15, 2021 4:03 pm
MishkaWorries wrote: Mon Feb 15, 2021 3:37 pm With that high of a credit rating, wouldn't Toyota be able to borrow money at a much lower rate than 1.5%? What's the catch here?
An A+ rated company should be able to borrow at less than 1.5%, and it can also lock in the low rates for many years.

Toyota may just be trying to diversify its funding sources. Deposits usually don't dry up as quickly as the bond markets. It's the same reason that Ally got into banking to fund its car loans, but Toyota doesn't have the overhead of running a bank.
Yes, this appears to be correct. Toyota has lots of public variable and fixed rate notes at less than 1.50%. The Income Driver Notes appear to be part of its strategy to diversify its funding sources to be less reliant on banks and public markets.

https://www.spglobal.com/marketintellig ... s-62006252
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Re: Any experience with Toyota Income Driver Notes?

Post by RetiredNewbie »

I just applied for one, and filed in the bank info to send them a $1000 initial investment. It was quick and easy. They emailed me this reply...

"Congratulations! Your enrollment in our Toyota Financial Services IncomeDriver Notes program has been received. Your enrollment has been successfully submitted and is currently being reviewed. Upon a successful review of the information you provided, your Note will be opened and the initial investment transaction will occur. Please note that the debiting of the bank account you specified may take up to 5 business days. Once your note has been opened and funded, you will receive an email notification and instructions on how to manage your Note going forward."
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

Stinky wrote: Fri Feb 26, 2021 8:09 am
indexfundfan wrote: Fri Feb 26, 2021 7:05 am
Stinky wrote: Thu Feb 25, 2021 4:27 pm
Stinky wrote: Sun Feb 21, 2021 7:41 am Bumping this thread to gather more input.

I’ve signed up for a new account with a nominal amount of funding to see how it goes. Process is smooth so far.
My first nominal funding has gone in. Balance showed up as expected online. Also got a letter in the mail with my full “note number” (not visible on the website).

I initiated a second, larger transfer yesterday. The money left my checking account today. I expect that it will show up on the Toyota site tomorrow.

So far so good.
Interesting. If you don't mind, what is the speed of their transfer system?

Transfer submitted online : T+0
Money debited from linked bank : T+1
Money credited : T+2 ?
Money available : T+??
You got the first three items correct.

Money is credited, but not yet available, on T+2. I will check daily and post back when it is available.

Once this deposit cycle is fully finished, I will do a small withdrawal and post results.
I was just glancing through the Prospectus regarding investments by ACH

"Investments made by ACH transfer are invested in your Notes and begin to accrue interest on the same day
your money is credited. In the case of a one-time transfer, the Agent Bank will prepare an electronic transfer for the
amount authorized and on the business day you have requested. One-time ACH investment requests made prior to
7:30 a.m. Central Time generally will be posted to the Note on the next business day and requests made at or after
7:30 a.m. Central Time generally will be posted two business days following the request. Investments made by ACH
cannot be redeemed until three business days after such amounts are credited to the Notes."

So it looks like the money will be available 3 business days after it is credited.

Transfer submitted online : T+0
Money debited from linked bank : T+1
Money credited : T+2
Money available : T+5
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Re: Any experience with Toyota Income Driver Notes?

Post by Stinky »

indexfundfan wrote: Mon Mar 01, 2021 7:55 pm
I was just glancing through the Prospectus regarding investments by ACH

"Investments made by ACH transfer are invested in your Notes and begin to accrue interest on the same day
your money is credited. In the case of a one-time transfer, the Agent Bank will prepare an electronic transfer for the
amount authorized and on the business day you have requested. One-time ACH investment requests made prior to
7:30 a.m. Central Time generally will be posted to the Note on the next business day and requests made at or after
7:30 a.m. Central Time generally will be posted two business days following the request. Investments made by ACH
cannot be redeemed until three business days after such amounts are credited to the Notes."

So it looks like the money will be available 3 business days after it is credited.

Transfer submitted online : T+0
Money debited from linked bank : T+1
Money credited : T+2
Money available : T+5
I've now completed a "regular" (that is, not "account opening") ACH transfer from my bank to Toyota. It went one day faster than the prospectus said; that is, the funds are available on day T+4, not day T+5. So, to summarize my actual experience:

Transfer submitted online before 7:30am : T+0
Money debited from linked bank : T+1
Money credited : T+2
Money available : T+4

Of course, YMMV.

I submitted a nominal ACH transfer request from Toyota to my bank this morning. I'll track and report how the money moves and is reported from this transfer.

Finally, I earned a teensy amount of interest in February. The interest was credited as of the last business day of the month (that is, Friday, 2/26), and was "available" when I logged in the next morning. The interest was added to the balance; I don't see anyplace where I can ask that interest be automatically sent to my bank.
Last edited by Stinky on Wed Mar 03, 2021 5:28 am, edited 1 time in total.
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

Stinky wrote: Tue Mar 02, 2021 4:42 am
indexfundfan wrote: Mon Mar 01, 2021 7:55 pm I was just glancing through the Prospectus regarding investments by ACH

"Investments made by ACH transfer are invested in your Notes and begin to accrue interest on the same day
your money is credited. In the case of a one-time transfer, the Agent Bank will prepare an electronic transfer for the
amount authorized and on the business day you have requested. One-time ACH investment requests made prior to
7:30 a.m. Central Time generally will be posted to the Note on the next business day and requests made at or after
7:30 a.m. Central Time generally will be posted two business days following the request. Investments made by ACH
cannot be redeemed until three business days after such amounts are credited to the Notes."
I've now completed a "regular" (that is, not "account opening") ACH transfer from my bank to Toyota. It went one day faster than the prospectus said; that is, the funds are available on day T+4, not day T+5. So, to summarize my actual experience:

Transfer submitted online : T+0
Money debited from linked bank : T+1
Money credited : T+2
Money available : T+4
Thanks. Do you happen to recall if you submit before or after 7.30am CT? According to the Prospectus, if you submit before the cutoff, money will be credited T+1 and available T+4.
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Stinky
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Re: Any experience with Toyota Income Driver Notes?

Post by Stinky »

indexfundfan wrote: Tue Mar 02, 2021 7:24 am
Stinky wrote: Tue Mar 02, 2021 4:42 am
indexfundfan wrote: Mon Mar 01, 2021 7:55 pm I was just glancing through the Prospectus regarding investments by ACH

"Investments made by ACH transfer are invested in your Notes and begin to accrue interest on the same day
your money is credited. In the case of a one-time transfer, the Agent Bank will prepare an electronic transfer for the
amount authorized and on the business day you have requested. One-time ACH investment requests made prior to
7:30 a.m. Central Time generally will be posted to the Note on the next business day and requests made at or after
7:30 a.m. Central Time generally will be posted two business days following the request. Investments made by ACH
cannot be redeemed until three business days after such amounts are credited to the Notes."
I've now completed a "regular" (that is, not "account opening") ACH transfer from my bank to Toyota. It went one day faster than the prospectus said; that is, the funds are available on day T+4, not day T+5. So, to summarize my actual experience:

Transfer submitted online : T+0
Money debited from linked bank : T+1
Money credited : T+2
Money available : T+4
Thanks. Do you happen to recall if you submit before or after 7.30am CT? According to the Prospectus, if you submit before the cutoff, money will be credited T+1 and available T+4.
Yes I did submit before 730am CT.

I didn’t notice it being credited until T+2. Maybe my local bank was just slow in responding to Toyota’s request for funds.
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Re: Any experience with Toyota Income Driver Notes?

Post by SpaceCowboy »

I've completed my enrollment, initial deposit and additional transfers.
I think this is a really good offering in the current interest rate environment.
A couple of items. With the Mercedes version, MBFS, you have to be an accredited investor and the minimum for a fee free note is much higher. Toyota only requires US citizenship and SSN. Minimum is $500 to open and $250 maintenance.
You are only permitted to link one bank account, so make sure to use your main checking or a good online hub account like Ally, which allows a large number of linked accounts.
I just wonder is the interest rate premium will last.
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Re: Any experience with Toyota Income Driver Notes?

Post by Stinky »

Stinky wrote: Tue Mar 02, 2021 4:42 am
I've now completed a "regular" (that is, not "account opening") ACH transfer from my bank to Toyota. It went one day faster than the prospectus said; that is, the funds are available on day T+4, not day T+5. So, to summarize my actual experience:

Transfer submitted online before 7:30am : T+0
Money debited from linked bank : T+1
Money credited : T+2
Money available : T+4

Of course, YMMV.

I submitted a nominal ACH transfer request from Toyota to my bank this morning. I'll track and report how the money moves and is reported from this transfer.

Finally, I earned a teensy amount of interest in February. The interest was credited as of the last business day of the month (that is, Friday, 2/26), and was "available" when I logged in the next morning. The interest was added to the balance; I don't see anyplace where I can ask that interest be automatically sent to my bank.
My ACH transfer request from Toyota to my bank went very quickly. I submitted to Toyota before 7:30am yesterday morning (Tuesday), and the funds are in my bank account this morning.

From what I've seen so far, this Toyota account is a viable alternative to money market or bank savings accounts. It's currently paying 1.50%, subject to change of course. The website is simple and understandable, and the funds transfer works smoothly and effectively.

Yes, I'm taking the credit risk on Toyota Motor Credit Corporation, a single corporate entity. I personally feel comfortable in general with corporate credit risk, and I realize that not all Bogleheads feel the same way. As noted upthread, TMCC is rated A+ by Fitch, which is a reasonably strong rating.

I welcome hearing from others as they either consider these notes, or have actual experience (positive or negative) with the notes.
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

SpaceCowBoy and Stinky, thanks for sharing. I submitted an application, but I am currently undecided how to use it.

There is some small degree of risk with this, so I would be reluctant to put substantial cash into it. But if I don't put much cash into it, then the additional interest is not that much more from what you can get from FDIC insured accounts (yielding close to 1%).

Hence my dilemma.
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Re: Any experience with Toyota Income Driver Notes?

Post by lakpr »

indexfundfan wrote: Wed Mar 03, 2021 10:44 am SpaceCowBoy and Stinky, thanks for sharing. I submitted an application, but I am currently undecided how to use it.

There is some small degree of risk with this, so I would be reluctant to put substantial cash into it. But if I don't put much cash into it, then the additional interest is not that much more from what you can get from FDIC insured accounts (yielding close to 1%).

Hence my dilemma.
If you are investing in a bond fund anywhere in your portfolio, you are implicitly accepting the credit quality of underlying corporate bonds, which is BAA.

Toyota Motor Credit Corporation, the obligor on these notes, is rated A+, which is better than the corporate bonds.

Point I am trying to make here is that, if you were not hesitant to invest in Total Bond Market index fund, you should not be hesitant to invest in these Income Driver Notes either.

The Total Bond Market index is 63% treasuries and 37% corporate bonds approximately. Consider redirecting 37% of the bond market index investment into these Income Driver notes, and the remainder 63% into treasury funds.
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

lakpr wrote: Wed Mar 03, 2021 10:59 am
indexfundfan wrote: Wed Mar 03, 2021 10:44 am SpaceCowBoy and Stinky, thanks for sharing. I submitted an application, but I am currently undecided how to use it.

There is some small degree of risk with this, so I would be reluctant to put substantial cash into it. But if I don't put much cash into it, then the additional interest is not that much more from what you can get from FDIC insured accounts (yielding close to 1%).

Hence my dilemma.
If you are investing in a bond fund anywhere in your portfolio, you are implicitly accepting the credit quality of underlying corporate bonds, which is BAA.

Toyota Motor Credit Corporation, the obligor on these notes, is rated A+, which is better than the corporate bonds.

Point I am trying to make here is that, if you were not hesitant to invest in Total Bond Market index fund, you should not be hesitant to invest in these Income Driver Notes either.

The Total Bond Market index is 63% treasuries and 37% corporate bonds approximately. Consider redirecting 37% of the bond market index investment into these Income Driver notes, and the remainder 63% into treasury funds.
I get your point about credit rating. However, Total Bond is diversified. Any one company failing will only have a minimal impact, unlike the case here.
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Re: Any experience with Toyota Income Driver Notes?

Post by lakpr »

indexfundfan wrote: Wed Mar 03, 2021 11:10 am I get your point about credit rating. However, Total Bond is diversified. Any one company failing will only have a minimal impact, unlike the case here.
True, but the higher credit quality of A+, and the higher 1.5% yield, compensates for that single-obligor risk. These notes are also Senior Unsecured notes, only one notch below the Senior Secured, so in case TMCC goes kaput tomorrow, you are still going to get some of your money back.
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Re: Any experience with Toyota Income Driver Notes?

Post by RetiredNewbie »

Even though I consider myself risk-averse, I applied because I believe that there is an extremely small chance that Toyota will default on their notes. Their long-standing commitment to quality demonstrates to me that they care about their reputation. I would not buy this type of note from Ford, because in my observation quality hasn’t meant much to Ford in many years; from what I have seen in their dealings with my family and neighbors.
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Re: Any experience with Toyota Income Driver Notes?

Post by Stinky »

RetiredNewbie wrote: Wed Mar 03, 2021 11:33 am Even though I consider myself risk-averse, I applied because I believe that there is an extremely small chance that Toyota will default on their notes. Their long-standing commitment to quality demonstrates to me that they care about their reputation. I would not buy this type of note from Ford, because in my observation quality hasn’t meant much to Ford in many years; from what I have seen in their dealings with my family and neighbors.
This is my assessment also.

For 2021 and the next couple of years, a large part of my income is heaped into February and March, arising from deferred comp payouts from my former employer. I’ve put that money into Toyota notes. The balance will run down between now and next February. At that time, I’ll reassess the Toyota notes, both as to interest rate and credit quality.
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

My application online status is stuck in "Screening". There has not been any microdeposits made to my linked bank account yet.

For those who have applied, are you stuck in the "Screening" status for a few days?

I am asking because I applied for a trust account, and maybe it is being held up.
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Re: Any experience with Toyota Income Driver Notes?

Post by Stinky »

indexfundfan wrote: Wed Mar 03, 2021 11:46 am My application online status is stuck in "Screening". There has not been any microdeposits made to my linked bank account yet.

For those who have applied, are you stuck in the "Screening" status for a few days?

I am asking because I applied for a trust account, and maybe it is being held up.
Screening for me was just a day or so.

And Toyota didn’t do any micro deposits on my account.
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Re: Any experience with Toyota Income Driver Notes?

Post by crystalbank »

This is interesting. I'm curious about the tax obligations. Do I have to pay tax only when I redeem the note(s) or do I have to pay irrespective of redemption on the interest (or coupon?) annually?
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Re: Any experience with Toyota Income Driver Notes?

Post by MishkaWorries »

indexfundfan wrote: Wed Mar 03, 2021 11:46 am My application online status is stuck in "Screening". There has not been any microdeposits made to my linked bank account yet.

For those who have applied, are you stuck in the "Screening" status for a few days?

I am asking because I applied for a trust account, and maybe it is being held up.
I feel like I'm stuck in screening too. I opened the account Friday 2/26 and it was accepted within minutes. Today is Wednesday 3/3 and still showing screening.

I opened the account as joint and not trust. It's linked to our Schwab bank account. So neither of those things should be complicated.
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Re: Any experience with Toyota Income Driver Notes?

Post by Stinky »

crystalbank wrote: Wed Mar 03, 2021 11:55 am This is interesting. I'm curious about the tax obligations. Do I have to pay tax only when I redeem the note(s) or do I have to pay irrespective of redemption on the interest (or coupon?) annually?
Interest is credited to the account monthly.

I expect that taxable interest will reported at the end of each year, just like other corporate debt.
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Re: Any experience with Toyota Income Driver Notes?

Post by MishkaWorries »

MishkaWorries wrote: Wed Mar 03, 2021 12:27 pm
indexfundfan wrote: Wed Mar 03, 2021 11:46 am My application online status is stuck in "Screening". There has not been any microdeposits made to my linked bank account yet.

For those who have applied, are you stuck in the "Screening" status for a few days?

I am asking because I applied for a trust account, and maybe it is being held up.
I feel like I'm stuck in screening too. I opened the account Friday 2/26 and it was accepted within minutes. Today is Wednesday 3/3 and still showing screening.

I opened the account as joint and not trust. It's linked to our Schwab bank account. So neither of those things should be complicated.
Just received the notice from Toyota my note was opened. I opened the account on Friday. Toyota says the Note was opened on Monday 3/1 and I received the email on Wednesday evening on 3/3. So not as smooth as it could be.
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Re: Any experience with Toyota Income Driver Notes?

Post by Zosima »

RetiredNewbie wrote: Wed Mar 03, 2021 11:33 am Even though I consider myself risk-averse, I applied because I believe that there is an extremely small chance that Toyota will default on their notes. Their long-standing commitment to quality demonstrates to me that they care about their reputation.
I also take comfort from the fact that institutional investors are investing in similarly situated notes from Toyota Motor Credit Corporation due Sept 2021 that are currently yielding in the 0.25% - 0.30% range. Yes, there is marginal credit risk but with demand notes if there is financial trouble there will hopefully be sufficient notice from credit agencies and others to allow for redemption.
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Re: Any experience with Toyota Income Driver Notes?

Post by Free to Choose »

General Motors also has Demand Notes. Originally, they were GMAC (General Motors Assurance Corp) Demand Notes. GMAC was GM's financial division.
Before GM went bankrupt in 2009 and afterwards, it was a little scary to own them. I moved most of my money out of them. Cerberus Capital took over the demand notes and then they went to Ally. GM never failed to pay the interest, which was always higher than CDs.

Ally just announced they are closing down the Demand Notes in March/April 2021.

GM started a new demand notes called Right Notes, which is currently paying 1.50%, daily compounding. You have to have some relationship (employe, related to an employe, GM dealer employe) with GM to invest. Details in the prospectus. Rightnotes.com

This is where I keep my extra cash/emergency fund. I keep my checking account balance at a minimum. If I need extra, I transfer it from Right Notes.

I have had Demand/Right Notes for over 20 years. It has worked out very well.
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Re: Any experience with Toyota Income Driver Notes?

Post by stay_the_course »

SpaceCowboy wrote: Tue Mar 02, 2021 7:40 pm I've completed my enrollment, initial deposit and additional transfers.
I think this is a really good offering in the current interest rate environment.
A couple of items. With the Mercedes version, MBFS, you have to be an accredited investor and the minimum for a fee free note is much higher. Toyota only requires US citizenship and SSN. Minimum is $500 to open and $250 maintenance.
You are only permitted to link one bank account, so make sure to use your main checking or a good online hub account like Ally, which allows a large number of linked accounts.
I just wonder is the interest rate premium will last.
Source on the US citizenship requirement? The FAQs https://www.incomedrivernotes.com/en.html#faqs seem to require only SSN and US address.
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Re: Any experience with Toyota Income Driver Notes?

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Following
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

Free to Choose wrote: Wed Mar 03, 2021 7:55 pm General Motors also has Demand Notes. Originally, they were GMAC (General Motors Assurance Corp) Demand Notes. GMAC was GM's financial division.
Before GM went bankrupt in 2009 and afterwards, it was a little scary to own them. I moved most of my money out of them. Cerberus Capital took over the demand notes and then they went to Ally. GM never failed to pay the interest, which was always higher than CDs.

Ally just announced they are closing down the Demand Notes in March/April 2021.

GM started a new demand notes called Right Notes, which is currently paying 1.50%, daily compounding. You have to have some relationship (employe, related to an employe, GM dealer employe) with GM to invest. Details in the prospectus. Rightnotes.com

This is where I keep my extra cash/emergency fund. I keep my checking account balance at a minimum. If I need extra, I transfer it from Right Notes.

I have had Demand/Right Notes for over 20 years. It has worked out very well.
Thanks for sharing. The FAQ at RightNotes does not actually specify you need to be a GM employee or dealer. However, in the application, you are asked to specify your relationship with GM. I see two easy overrides one can use

1) CUSTOMER OF GM
2) GM STOCKHOLDER

I guess if you owned a GM car, you qualify. Or you can buy a share of GM, currently $53. :-)
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

I just noticed that both Toyota Income Driver and GM RightNotes are administered by www.eaccountservices.com. So they look to have very similar online features.

The other thing I note is that GM is also paying 1.5%. So hopefully that encourages Toyota to maintain the same 1.5% rate to stay competitive with GM.
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Re: Any experience with Toyota Income Driver Notes?

Post by indexfundfan »

MishkaWorries wrote: Wed Mar 03, 2021 6:46 pm Just received the notice from Toyota my note was opened. I opened the account on Friday. Toyota says the Note was opened on Monday 3/1 and I received the email on Wednesday evening on 3/3. So not as smooth as it could be.
I am still waiting for my notification. I applied over the weekend.

Have they deducted the money from your linked bank?
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