THE BLOG

13
Aug

Title Loans: Profits and ROI for Entrepreneurs

Profits & ROI for a Car Title Loan Business 

An entrepreneur’s perspective.

Let’s begin with a real transaction. We have equity in California stores amongst other states. We do payday loans, car title lending, scrap gold buying and tax services. In one of our locations, a new customer walked-in requesting a title loan on his truck. We determined the “low-book” value of his collateral was $15,000. We loaned $3000 at 9% per month ($270/month) for 36 months with zero pre-payment penalty. If this customer chooses to, he’ll pay us a total of $9720 in fees AND will still owe us $3000 in principal.

[NOTE: If you’ve already invested in our “How to Start a Car Title Loan Company Manual,” simply whip it out and read pages 58 – 59. It discusses car title loan business key business metrics in detail.]

My point? You really don’t need to read any further to grasp the profit potential of a car title loan company.

You can read any daily newspaper and stories like the following will appear:

A single mom in Iowa received a $350 auto title loan for 14 days, paid only the interest portion 8 times with no portion applied to the principal, in total paying $977.

An auto mechanic in Tyler, Texas paid $1211 in interest and fees over 11 months; only having reduced the principal balance by $15.

Burdened by medical expenses, Amy Poormom applied for and received a $500 auto title loan secured by her 1995 Ford Taurus.  This was a loan for 30 days and specified a loan fee of $30 per $100 borrowed.  Amy renewed (paid only the interest/fee of $150) for 12 months.  At this point Amy had paid a total of $1800 in interest/fees while still owing a balance of $500.

Of course, the “mean” auto title loan company repossessed Amy’s car (which she needed for work) and sold it for $750 at an auction.  Now Amy can no longer get to work.  Amy lost her job.  Worry and stress put her in the hospital.  Now, the hospital is suing her for non-payment; she has no job so she has no insurance.

What is not mentioned or even considered is that Amy Poormom needed the initial car title loan because no one in her family was willing to provide her with the $500 she needed for tires and brakes on her car.  The auto title loan company actually enabled her to gain another 12 months to get her life back on track.  It could be said that had the auto title loan company not come to her aid and provided some hope for Amy, the ultimate outcome would have come earlier.  Perhaps the family should have performed an intervention to help her with her crack habit. 

Ok, if you’re reading this you may think we are getting carried away.  But these are real-life events. 

ENOUGH OF THIS!

Back to profits.

States and provinces having specific auto title loan statutes and fee structures typically prescribe 3% – 30% per month on the principal loaned; 25% being the average in the USA.  Thus, a $1500 loan for a 30 day title loan could yield total interest payments of $45 to $375 with no portion applied to the principal.  Thus, if after 6 months, the title loan consumer continues to “roll-over” this title loan they will have paid as much as $2250 in fees/interest.  The balance due on their car title loan would remain $1500.

$500.00 borrowed for a 30 day term will typically cost $125 including miscellaneous fees.  The actual range is roughly $75 to $190 depending on the state/province and the exact circumstances of the title loan borrower.

After you enter the car title loan business, you’ll be pleasantly surprised by the number of customers who will have a late model Lexus or Mercedes.  It’s amazing how many people receive settlements and use the proceeds to purchase a new luxury car.  Later they experience cash-flow problems and need your help; and they have the title to their car!

Even in a state like Florida where the statutes prescribe an interest rate of 30% per annum, it’s a simple matter to put $250,000 “on the street” in auto title loans.  This would yield a gross of $75,000/year versus a CD earning $2,500 (1% annually).

These car title loan clients may not be totally bereft, but they are in trouble and are willing to borrow money at interest rates dwarfing those of a conventional bank loan; ranging from 17 percent a month (204 percent APR) on $500 or less to 10%, 20%, 30%  percent a month  on more than $5,000.

“Your job is your credit” rings very true in our industry; the business of lending money on car titles.  We have a Texas operator having 300 people bringing him $40 per week.  That’s $12,000 per week!  If the car breaks down, he has it fixed and adds it to their car loan.

A great number of auto title loan lenders add on several fees to improve their ROI’s and provide incentives to their title loan clients to pay on time.  These include but are not limited to:

  • A $15 fee if a collection letter must be mailed to the title loan consumer
  • A $25 returned check fee
  • Late fees (5% is typical)
  • Should a collector be sent to their door, a $50 to $100 fee is imposed

Deficiency fees are collected should a sale of the vehicle yield less than the amount owed on their title loan.

Want to know more? Learn how to start a car title loan business. Invest in our “How to Start a Car Title Loan Business Manual” now. In 30 seconds you’ll receive a link to download it in Adobe Acrobat [PDF] and begin your journey. Click Here!

Title Loan Business

Title Loan Business

13
Jun

Start a Georgia Car Title Loan Business

Georgia Title Pawn & Title Loans

How to open a car title loan business in Georgia

Governments move links often. If you encounter any broken links, start your research here: http://dbf.georgia.gov/

If you follow the advice offered in our “Car Title Loan Manual,” you’ll get a title loan here as part of your research: http://www.titlemax.com/georgia-title-loans/

The state of Georgia refers to car title loans as title pawn transactions.

Georgia Vehicle Registration: http://dor.georgia.gov/vehicle-registration

Georgia Title Loan legislation specifically authorizes “title pawns” as a type of pawn transaction.

A Georgia pawn broker may:

  • Charge interest and charges of up to 25% of the principal amount for each 30 day period during the first 90 days of a title loan.
  • Transactions extended beyond 90 days may be charged for each 30 day period interest and pawnshop charges which together equal no more than 12.5% of the principal amount advanced with a minimum charge of $5.00 each 30 days.

Georgia lawmakers passed the current title pawn bill authorizing lenders to charge an annual percentage rate that amounts to as much as 300 percent.

A quote from the Georgia Department of Banking & Finance:

“Some consumers turn to pawnshops and title lenders when they are in need of emergency cash or a short-term loan. It should be noted that the Georgia Department does not regulate these types of businesses.

Depending on jurisdiction, city or county ordinances outline specific requirements for licensing and supervision of pawnshops in Georgia. Local police departments/public safety departments are typically responsible for supervision of pawnshops in their jurisdiction and often handle the licensing process as well.

One of the primary purposes behind handing supervision of the Georgia title loan industry over to law enforcement agencies is to allow them to review pawn data for stolen property.

Section 44-12-136 of the Official Code of Georgia Annotated (O.C.G.A.) provides for the supervision and licensing of pawnbrokers by municipalities.

Title Loan Business

Title Loan Business

Again, in Georgia, the interest rate car title loan companies are allowed to charge is capped by law at 25 percent monthly (300 percent annually) for the first three months and 12.5 percent monthly after that (150 percent annually). This means a combined maximum yearly interest rate of 187.5 percent.

In the case of title pawn, Georgia law [O.C.G.A. Section 44-12-138(b)(3)] requires the pawnbroker to provide title loan borrowers the following written statement when a borrower pawns their vehicle: “Failure to make your payment as described in this document can result in the loss of your motor vehicle. The pawnbroker can also charge you certain fees if he or she actually repossesses the vehicle.”

Again, the Georgia Department of Banking and Finance DOES NOT license or have any jurisdiction over car title loan lenders, pawnbrokers or pawn transactions.

09
Jun

Texas Payday Loan & Auto Title Loan Business

Texas Payday Loan & Auto Title Loan Business

Texas payday loans and Texas auto title lending can be very profitable IF you remember that the business of lending money to make money is really a COLLECTIONS BUSINESS!

As we stress in our “How to Start a Title Loan Business Manual” and in our stores and when performing consulting work with our clients, the collection process begins the moment the lender begins a conversation with the borrower.

The lender must “look” for key phrases, terminology, and triggers that set off alarm bells; this borrower will NOT pay me back as agreed! For details, read our Manual or opt in to our free Monthly Newsletter. [It’s over there on the right side of your screen.]

Texas Payday Loan & Auto Title Loan Business

Texas Payday Loan & Auto Title Loan Business

07
Jun

Car Title Loan Marketing Ideas: Windsor Financial

Car Title Loans: All the pundits think it’s easy to make a fortune lending money to consumers in return for the title to their automobile, motorcycle, RV, boat… After all, successful transactions can easily top 200%+ Annual Percentage Rates (APR).

WRONG!

It is easy for title lenders to give their money away. But, there are two issues we must deal with first:

  • How do car title loan lenders rise above all the other lenders and come to the attention of potential borrowers?
  • Collections: how do we get the borrower to pay us back the loan principal in a timely fashion without the need for us to drive the borrower nuts with text messages, phone calls, emails, letters, personal visits, license plate technology… and on and on?

I’ve addressed these topics in many previous Posts. So… I’ll focus on a simple marketing piece I received today from Windsor Financial; a car title loan lender here in California.

I think it’s a nice piece. My iPhone image does not do it justice. It’s clean, bright and to the point; inspite of this poor image – my fault 🙁

Bottom line? Our consumer is often confused! They’re bombarded with TV, radio, direct mail, social media, texts, phone calls… They hear terms like “personal loan, cash advance, debt reduction, installment loan, line-of-credit loan…”

Our answer? Be direct! Keep your marketing IP simple and clear. Quickly communicate to your car title loan borrower what you do and how they can easily do business with you; a “clear call to action.”

PS: If you’re a title loan borrower in the Los Angeles area, see my friends at Windsor Financial! Good folks!!

Car Title Windsor Financial Marketing Piece

Car Title: Windsor Financial Marketing Piece

05
Jun

GPS Devices for Title Loan Lenders

Complaint alleges that title loan lender used GPS tracking devices without consumer’s knowledge or consent to conduct repossessions of vehicles.

Florida Attorney General Pam Bondi’s Office obtained a consent order to resolve a complaint filed against a Jacksonville car dealership and its president regarding the dealership’s misleading business and sales practices. The complaint alleges that Beach Blvd. Automotive used GPS tracking devices to track hundreds of purchased vehicles without consumer’s knowledge or consent to conduct unconscionable repossessions of vehicles. The defendants also allegedly created fake online profiles and, without consumer knowledge, used consumer data to post false positive comments online about the dealership.

Do not let this happen to you! All your car title loan contracts should contain a consumer acknowledgement of the GPS device your company installs; 10 point fonts at a minimum are recommended. Refer to our sample “GPS Consumer Disclosure” in  our “Car Title Loan Manual” for an example.

Additionally, our “Title Loan Manual” provides contact information for a multitude of GPS device vendors.

Car Title Loan ProfitsAccording to the Florida AG complaint, “Beach Blvd. Automotive, its exclusive financing arm, Beach Blvd. Auto Financing, and John O. King, Sr., attempted to collect non-existent debt from consumers and threatened to use force to repossess purchased vehicles. The defendants allegedly increased consumers’ monthly car payments by adding optional items to the sales transaction without proper disclosure to customers. On several occasions, the defendants did not honor a promised warranty and, in some instances, charged a $399 pre-delivery inspection fee for an inspection never conducted.”

“The agreed-upon consent order requires the defendants to modify business practices and provide more than $5 million in debt forgiveness to consumers. As part of the consent judgment, the defendants will also refrain from making reports to the credit reporting agencies for consumers whose accounts are covered under the consent order. The consent order provides that within 60 days of the order’s entry, the defendants will provide equitable monetary relief, such as debt forgiveness, with a value of more than $5.1 million to certain former and current customers with covered accounts. In addition, BBA will pay $2,500 in consumer redress relating to certain binder deposits made by consumers and will also pay more than $280,000 for attorneys’ fees and court costs.”

Need help starting a car title loan business? Begin here: “How to Start a Title Loan Business via a storefront or the Internet.”

Here’s a link to the Consent Order: Florida AG on Car Title Loan Complaint

01
May

Can a Car Title Lender Repossess a Car After One Missed Payment?

What’s a Car Title Loan? When Can the Lender Repo it?

So, the question is, can you repossess the car, truck, boat, motorcycle, RV, boat… when your borrower has failed to make their timely payment to you?

Answer? It depends. You must check with your state or province department of banking, department of financial institutions… whatever the appropriate regulator is for your geographic area.

For example, in California where we have store-fronts and offer Inerner loans, we can repo the collateral after the first missed payment.

Here’s the California law from the California Department of Business Oversight website:

CAN A CALIFORNIA FINANCE LENDER REPOSSESS A VEHICLE AFTER ONE MISSED PAYMENT?

Title Loan Business

Title Loan Business

“The Finance Lenders Law does not prohibit a lender from repossessing a vehicle after a single missed payment. To determine whether the repossession of a vehicle is permissible under your loan, refer to the original loan/contract documents that you signed when the financing was obtained. In most cases, lenders are within their rights to repossess a vehicle when a payment is not made.”

What is a car title loan? Here’s the long-winded answer: What is a car title loan.

30
Apr

Marketing Idea for Installment, Title, Payday Loan Companies

Here’s a sample marketing piece for lenders offering car title, installment, payday loan… lenders.

This loan marketing idea is appropriate for direct mail, , door hangars, coupons… (add a Spanish Version to the reverse side).

Note that there is no mention of fees. Thus, we are not setting off “time bombs” that require us to add various annual percentage rates APR scenarios! This is a critical strategy and one we discuss thoroughly in our “How to Start a Car Title Loan Business Manual.”

Marketing Idea for Personal Loans, Car Title Loans, Payday Loans...

Marketing Idea for Personal Loans, Car Title Loans, Payday Loans…

27
Apr

Car Title Loan Statistics & Profits in California

Car Title Loan Statistics Reported by State of California: 

  • Growth in auto title secured consumer loans slowed in 2015.
  • The number of such loans originated last year went up 9.5 percent, to 116,444 from 106,373 in 2014.
  • By comparison, the year-over year growth rate in the number of loans in 2014 was 16.2 percent.
  • The aggregate principal of auto title loans in 2015 increased 10.9 percent from 2014, to $423.5 million from $381.9 million.
  • That compared to a 14.1 percent growth rate in 2014.
  • In 2015, more than half of the loans valued at $2,500 to $4,999 carried annual percentage rates (APR) of 100 percent or higher.
  • Licensees originated 535,585 such loans, and 293,248 – or 54.7 percent – had APRs of 100 percent or higher.
  • This was the largest category of consumer loans, as measured by number originated.
  • Not sure: What is a Car Title Loan?

 

Last 10 Yeras Calif Car Title Lender Licenses

Last 10 Years of Calif Car Title Lender Licenses

And an analysis of the California title loan volume during the past 10 years:

Car Title Loan Volume
Average APR fees charged

Average APR for Car Title Loans

Access to the full Report is here: Calif Dept. of Business Oversight

13
Mar

Texas Car Title Loan Business Profits

How to Start a Texas Car Title Loan Business

You want to learn how to start a car title loan business? Read on…

According to The Texas Star Telegram, the typical Texas household is $40,000 in debt. They don’t make it clear whether this includes all Texas home loan mortgage debt; stupid.

The one thing that is clear is that Texas car title loan borrowers paid $360,000,000 in car title loan fees and interest last year. [Note: That’s an increase of $52,000,000 from the previous year. Car title loan lending is good!] This information was disclosed by the OCCC; the Texas regulatory agency for car title loan and payday loan stores and internet lenders.

Why would Texans spend this kind of money on car title loans? Because there is no where else to turn to in times of financial duress. Many Texans, like residents of California, Georgia, Arizona, Louisiana… would rather borrow from a car title loan lender for a few months than beg for help from their employer, family or friends. Why?

  • Car title loans are quick and easy
  • To qualify, you need to prove you can pay back the money and you have a car, RV, motorcycle… with a clear title. That means, no lien holder.
  • That’s right! Cars, RV’s, motorcycles, boats… all possible collateral for a title loan
  • Car title loan transactions are private
Title Loan Business

Title Loan Business

Critics of car title loan lenders are everywhere. Of course, they rarely experience “hard times” since the majority of these folks work for the government or a so-called consumer protection agency. A great example of this is the Consumers for Irresponsible Lending. [Just kidding; it’s the CRL.]

On the other hand, many consumers for car title loans work for the U.S. Post Office, the Department of Motor Vehicles, local hospitals, etc.

And of course, we have our “outlier’s.” Those consumers and lenders who push everything to the limit and place all financial service products to the point of over-regulaion! Not a day goes by that you don’t read some horror story about a poor, mistreated borrower whose car is repossessed or a car title lender who simply goes over the line of human decency because of greed.

As operators and consultants in the car title loan industry, we can report that the actual number of vehicles we repossessed are less than 3 in 100 funded title loans. In those few circumstances, we called, sent several text messages and letters to the borrowers in an attempt to get them to talk to us. Failing these measures, we simply picked up the phone, called our friendly repossessor and reported the vehicle plate and vehicle identification number to them. Within the week, the license plate scanner [LPS] company got a “hit” and our repossessor picked up the car having the title loan in a Wal-Mart parking lot.

Our car title loan repossessor delivered the vehicle to the Anaheim, Calif Manheim auto auction. There, the vehicle was reconditioned and “run” through the car auction. A week later we received our check from the auction house. We deducted the fees, interest, late charges and storage costs from the amount we received from the auction and sent the balance to our car title loan borrower’s last known address. [Note: This check was cashed :-)]

Car title loan lenders DO NOT WANT YOUR CAR! We just want our money. The fees are clearly explained AND posted on our websites and in the case of store-fronts, on the interior walls of the store.

Here’s an example of the fees we charge for a car title loan:

  • Vehicle “low book value” is $8000.
  • Borrower wanted $3000 for 30 days.
  • We charged her $180 in fees plus a $35 DMV fee.
  • That’s it!
  • Yeah, sure. Extrapolated over 365 days that’s 180%+ APR. So… if the borrower doesn’t like it, no one is forcing her to borrow the cash. Try your local bank. It would cost them $500+ just to do the paper work AND they will not offer these types of loans.

Is this loan predatory? We don’t think so. But it’s a bit like pornography. I can’t tell you for sure but I know it when I see it. In Texas, California, Georgia, Arizona… it’s legal. And for MANY Texan’s, this car title loan appears to be reasonable.

Start your own car title loan business. Get our “How to Start a Car Title Loan Business Manual” now; delivered immediately into your email inbox.

Click HERE to get started. Buy Now.

26
Feb

Car Title Loan Marketing Ideas

Marketing Ideas. By the guys who wrote the book on starting a payday loan, installment and  title loan business.

What’s a payday, installment, title loan lender to do? How do you get more customers? Google? Facebook? Instagram? Pinterest? Blogs, Direct mail? Yellow Pages Online? Buy leads? Billboards? What REALLY works? Acheiving success in increasing your loan portfolio size is a Pain in the ASS! A SLOW, long-term process.

It’s the simple stuff that works!

For our loan stores, we do use Google PPC and Bing but VERY localized (zip codes, city, county…) because the general PDL phrases are simply too expensive and poorly convert. Also, the lead gen companies have the time/expertise to FOCUS on this.

Storefront lenders must have a website that looks great on a phone! THIS IS ABSOLUTELY NECESSARY TODAY! 70% of the traffic coming to our websites are from a customer on their smart phone. We’re not trying to get apps completed on the smart phone but it does happen occasionally. Our #1 goal is to provide a customer with store directions via Google Maps, consumer visits and inbound phone calls with a formal appointment setup and then a call back to the customer before (reminders) and after the appointment (feedback). ALWAYS BE ASKING THE POTENTIAL CUSTOMER FOR THE APPOINTMENT!

Marketing? Our stores primarily do a lot of:

  • Local direct mail
  • Door hangars
  • Car wraps
  • Answer the damn phone! And do it right!! “How did you hear about us?”  [Understaffed? After hours?Use the experts at Centrinex discussed on a previous Post.]
  • Sign spinners
  • Community outreach
  • Billboards
  • Bandit signs [Yeah sure, check your city code enforcement. Or just do it and ask for forgiveness.]
  • Referral programs with businesses that service our demographic and need to be made aware of how we can help the merchant make more money. I’m referring to lawyers, bail bondsman, mechanics, Aamco transmission, brake shops, tire and rim companies, other PDL/title loan stores that employ different loan criteria or don’t service the same loan areas we do, tax preparers… GET CREATIVE!

WE ARE FOCUSED on determining who provided the referral and to pay them for it SOON IN CASH!! This makes a HUGE difference in regularity, quality and quantity of referrals! Of course, referrals from existing customers are treated with the same diligence and rewards. (And they are probably the most valuable leads we can get!) Your loan management software can be a BIG HELP with this process! [Does YOUR LMS offer many features enabling this “tagging” or are they weak? Do you even know?  This feature is a MUST today! Want to know which software companies we like and why? Most are TERRIBLE! Click Here]

Car Title Loan Advertising IdeaI used to own some Enterprise franchises. Rain or shine, a pretty girl or handsome face showed up at body shops – one of our target markets – REGULARLY with donuts, biz cards, pens, … THIS WORKS! Over and over again. Week in and week out! You must be manic about getting out from behind your desk and visiting these merchants in the field! Develop a script to briefly describe your business, why it’s good for the merchant and for the merchant’s customer. Then MAKE SURE you’re company does not do ANYTHING to make this merchant’s life more difficult because of your PDL/Title/Installment company’s actions!

I’ve ALWAYS thought the owner of the PDL/TITLE/INSTALLMENT store should personally do this at least one day every month! The owner has to get out in the field. Visit these potential referral businesses! Ask open ended questions! How is the business owner doing? How’s business? What are her/his challenges today? How can my business help this merchant? What’s working for them to increase THEIR sales revenue? What isn’t? Can we stay in touch? Additionally, assign employees to visit these merchants as well – every week on a formal schedule. Some of your employees will embrace this. Others will rebel. Role playing BEFORE in practice sessions with your Team will help prepare them for this. With time and effort, they will get better and yield referrals. CONSISTENCY is crucial!

Conduct a formal review of these visits immediately after returning from these field visits! Develop a check list and comments section. Who did your Team meet with? Their role? What was said? Outcome? Follow-up? Measure results.

Pick up a dozen donuts and just do it! Weekly!! No excuses!!! It’s about sales!!!! Document this strategy; hopefully with your loan management software!!!!! Repeat. Rinse. Do it again.

For most of us this is HARD! What do you say to the merchant? What’s your opening line? What if the merchant is busy? “I’m here to help us both make more money without burdening you with more hassles!” And don’t overlook any of the merchant’s employees who are present. You tell a Bail Bondsman’s office personnel that there’s cash available for referrals, THEY WILL SEND YOU CUSTOMERS! We have a car tire rim installer at a local tire/rim company who sends us 3-5 new clients every month. We have a stereo installer at a car stereo joint that sends us 2 – 6 new borowers every month! Susan, a car title lender in Los Angeles is using an inflatable character in front of her store to drum-up more business. This is working for her! People even have their pictures taken with it and post them on Facebook and Instagram. [If she picks up just one new customer a month with this approach, how much $$ in revenue will she earn over the life-time of this borrower? $1000? $5,000? $10,000? More?And from this borrower’s friends and family – referrals?]

You  know none of this is rocket science! Just good old Guerilla Marketing with a manic obsession!
Jer – Trihouse 702-208-6736 Comments? Questions?  Jer@TrihouseConsulting.com Share what’s working for you!!

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