How to Start a Car Title Loan Business in California
The Title Loan Industry is Growing in California
Car title loans are collateralized loans in which a borrower puts up the title to their automobile in return for a loan. In California, lenders must have a California Finance Lender’s License (CFL), a bond, and loan a minimum of $2501.
For entrepreneurs, the most appealing aspect of entering the car title loan industry in California is that the interest that can be charged by the lender is not specified by the State. In California car title loan stores we charge between 8% per month and 24% per month interest. The rate depends on a number of factors. Car title loans are offered to Californians via the Internet as well. The DBO sent out an alert last December noting that California car title loan lenders can legally charge unlimited interest rates on most loans since California state law imposes no minimum or maximum interest rate restrictions on loans of $2,500 or more. In 2014, 99 percent of all title loans made were for at least $2,500, the DBO said.
Car title loan borrowers must be made aware that the lender can repossess the automobile if a borrower fails to make payments per their loan contract.
The California Department of Business Oversight stated that the State’s No. 1 auto title lender leader in volume in 2014 was Loan Mart with 9,827 loans.
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