Tag: Profits

19
Apr

Title Loan Companies are Profitable?

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
California Title Loan Business Startup

Start a Title Loan Biz

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

 

09
Jul

Car Title Loan Profits

Car Title Loan Profits

Every entrepreneur wants to know how much money they can make in the car title loan industry!

Triple digit annual percentage rates (APR’s) are typical for car title loan stores. A  Missouri State Auditor’s Report revealed the average to be 200% to nearly 400%. Illinois approached 300%. Wisconsin averages 300%. Typical fees on a $500 loan are 25% per month; $125 month interest only. These are typical rates for car title loan companies having stores in states having fee caps. When operating in states not having prescribed statutes, you will experience even higher APR’s.

Car Title Loan ProfitsIt’s not uncommon for car title loan stores to minimize their APR calculations by failing to compute them properly. This is not necessarily intentional. Many operators simply don’t know how to calculate an APR correctly. This is not recommended. It can lead to serious problems, particularly after you become extremely successful. You will become a target. Your solution is to invest in vcar title loan management software. Our “Car Title Loan Bible” has a lengthy chapter devoted to this subject. Learn what to look for when choosing your car title loan software and check out all the vendors offering software.

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