So… you’ve been “googling” for weeks trying to figure out if a car title loan business you’ve been thinking about starting is gonna make money.
Title Loan Companies Profitable?
You see the title loan stores all around you. Maybe you’ve even noticed a few new title loan companies opening up in your city.
Do Title Loan Stores Make Money?
Let’s take a look at some real world numbers:
A title loan customer walked into our California store after “finding” us on her phone. [Yep, it’s important your website look great on a cellphone!]
She had a job and a 2009 Toyota 4Runner with 84,000 miles loaded with equipment. This truck was in fair shape. Low book value was close to $15K. She needed $3000 for 30 days. She had a clear title…
How could we go wrong in this scenario? We couldn’t! In Calif., under the Department of Business Oversight CFL licensing rules, we can charge whatever interest rate we choose to. Of course, as so often stated in our “Car Title Loan Training Manual,” we know what our competitors are charging because we mystery shop them monthly.
So… $3000 at 9% per month is what we proposed. She accepted. For the math challenged – like me – that works out to $270/month in interest for as long as she chooses to keep our $3000.
That’s $270/month for a car title loan month after month until she pays back our $3000 loan principal. So, she could conceiveably pay us $270/month for 8 months, as just one example, $2160 in fees AND still owe us $3000! Let’s not forget we have the title to a truck worth at least $12K in a fire sale!
Now, every State is different. [We have the car title loan State license applications and fee structures for every State these loans are legal in.]
Car title loan fees in the USA range from 3%/month to 25%+ per month!
It doesn’t take much of an imagination to realize that if in California, for example, we have $100,000 “on the street” in the form of car title loans earning 9% per month in gross fee income that equals $9,000/month. If our title oans average $3000, we only need 33 title loans; that’s ONE PER DAY. You think one employee can handle this volume 🙂 Will your city demographics support this?
Car title loan monthly store expenses:
- Rent = $750
- Employee (22 days/month at $20/hr all in = $3520 [High]
- Insurance, advertising, phones, software, licenses, accting, etc. = $500
- Misc. B.S. = $200/month
- NET before taxes = $4000/month ABSENTEE OPERATED = $48K/year
Now, this takes care of all your fixed costs. What if, after working your ass-off or an investor came forward, you could put together another $100K to “work on the street.”
$9,000 per month less your variable overhead = roughly $75,600/year + the $48,000/year totals $123,600! Recall that you would certainly not need another employee for this scenario!
So… YES! CAR TITLE LOAN LENDING IS PROFITABLE!
More info? Jer@AutomobilePawn.com 702-208-6736