Tag: car title loan business


PEW Car Title Loan Report

Here’s the latest PEW Report on car title lenders and consumers.

Of course, PEW takes pot shots at the industry and embraces a cynical evaluation of the car title loan product. However, don’t dismiss the numbers behind their madness. (Be sure to review the bottom of this Post where I’ll reveal the number of participants PEW enlisted for this “Study” on a $3 Billion dollar industry and a link to the actual “Report.”:-) And, start here to learn more about starting a car title loan business.

Pew’s report, “Auto Title Loans: Market Practices and Borrowers’ Experiences” found:

  • Title loan customers spend approximately $3 billion annually, or about $1,200 each, in fees for loans that average $1,000.
  • The annual interest rates for title loans are typically 300 percent annual percentage rate (APR), but lenders charge less in states that require lower rates.
  • The average lumpsum title loan payment consumes 50 percent of an average borrower’s gross monthly income, far more than most borrowers can afford. By comparison, a typical payday loan payment takes 36 percent of the borrower’s paycheck.
  • Between 6 and 11 percent of title loan customers have a car repossessed annually. (Note from Jer: THIS IS NONSENSE! Closer to 3%)
  • One-third of all title loan borrowers do not have another working vehicle in their households.
  • Title loan borrowers overwhelmingly favor regulation mandating that they be allowed to repay the loans in affordable installments.
  • One quarter of borrowers use title loans for an unexpected expense. 50% use them to pay regular bills. More than 9 in 10 title loans are taken out for personal reasons; just 3 percent are for a business the borrower owns or operates.

Focus group methodology

Hart Research Associates and Public Opinion Strategies conducted a focus group that was exclusively composed of title loan borrowers in Birmingham, Alabama, in September 2011. In May 2014, Pew also conducted four focus groups composed exclusively of title loan borrowers: two in St. Louis and two in Houston. All participants were recruited by employees of the focus group facilities. All groups were conducted in person, lasted two hours, and included eight to 11 participants. Several other focus groups of small-loan borrowers included one or more title loan borrowers as well.

So is my math correct? 4 focus groups with a max. of 44 participants? CRAZY!!!!!!!!!!!

Here’s a link to the original PEW “Report.” LINK


Internet Car Title Loans: a Tribe

Alleged Facts

20. Ms. Bynon is the owner of a 2008 Ford F150 Lariat Supercrew worth over $20,000. Exhibit P-7.

21. The vehicle was titled, registered, and licensed in Pennsylvania.

22. Ms. Bynon keeps the vehicle at her personal residence in Pennsylvania.

23. In 2013, Sovereign operated a web site under the fictitious name Title Loan America, from which it made title loans to residents of Pennsylvania at triple digit interest rates. Exhibit P-6.

24. During the month of March, 2013, Sovereign purports to have lent Ms. Bynon $2,500 at or about an annual interest rate of 180%.

25. Ms. Bynon entered into the loan transaction from a her computer at her home within the Commonwealth of Pennsylvania.

26. The car title loan was supposedly memorialized by a written contract, but Sovereign did Continue Reading..


How Does a Car Title Loan Work

This is a brief summary of a car title loan transaction. The exact details will vary depending on the state or province the car title loan takes place in. For a thorough discussion of how to make money in the car title loan industry, refer to our “Car Title Loan Business Start Up Manual.”

A customer who owns their car outright and has the title or “pink slip” drives their vehicle to your location. Most of us who make car title loans require at least the following from our customer:

  • A clear title to the car without liens or encumbrances
  • A duplicate set of keys
  • Proof of insurance including collision
  • Driver’s license
  • Phone bill
  • Proof of employment
  • Last 1-2 bank statements
  • Last utility bill
  • A minimum of 3 references with their complete contact information

Car title loan software is highly recommended for the above.

After the car title lender confirms the accuracy of all the application information (there are a multitude of data bases to perform these verifications) and verifies the “low-book” value of the automobile the car title loan is approved. Typically, the amount loaned on the vehicle (motorcycle, car, boat or RV) is 25% to 55% of this “low-book” value.

The car title loan consumer typically has 30 days to repay the loan principal and fees. Fees average 30% per month on the face amount of the car title loan. Of course, this varies greatly depending on where the car title loan takes place.

If the car title loan consumer is unable to repay the principal and fees on the date due, the car title loan lender usually collects the fees and agrees to extend the principal due date another 30 days.


What is a Car Title Loan?

What is a Car Title Loan?

Car title  loans, sometimes called pink slip loans or auto title loans are short term loans designed to provide consumers who own their cars with immediate funds. Car title loans usually require repayment within a period of two to 4 weeks (some may last as long as 36 months) with high interest rates so they should only be used for short term, temporary financial difficulties.

The term, “auto title loan” or “car title loan” is due to the practice of giving the lender the title to your car as collateral for the loan. If the loan is not repaid on time you risk losing your car. Auto title loans are also known as “pink slip loans” in some states because of the actual color of the car title (pink). Car title loans should not be confused with payday loans; they are two different animals.

The ultimate penalty for not repaying a car title loan is repossession by the lender. Before it goes that far however, most car title loan lenders will attempt to contact the borrower and collect payment or make suitable arrangements. Because the car title used as collateral is usually worth at least twice as much as the loan on the car, boat, motorcycle, boat, or RV, most borrowers do everything in their power to preserve ownership of their vehicle.

Unlike typical pawn shop agreements where the pawn broker takes possession of the collateral during the loan, borrowers maintain possession of their car and continue to operate their auto as they repay their car title loan.

Recovery of a car involved in a car title loan in which the pink slip owner fails to make the payments is becoming easier in today’s marketplace. The use of GPS systems (global positioning systems) that reveal a car’s position at all times in conjunction with starter interrupt systems are making it extremely difficult for car title loan consumers to avoid having their vehicle repossessed.

Many car title loan companies have two types of loans available. With Title Loans (also known as Pink Slip or “You Drive” loans), you can still keep your car to drive. With Storage Loans (also known as Auto Pawns), your vehicle is stored in a secure facility. Generally, the auto pawn consumer makes NO payments until the vehicle is picked.

Car title loans are approved in a matter of minutes regardless of credit history. A consumer’s credit report and credit history have zero bearing on receiving approval for a car title loan. The factors that do play a role are:
1) The consumer must have a job or guaranteed income
2) The consumer must have the title to their car (or the loan proceeds must be partially used to pay off any leins on the car).
3) The consumer seeking a car title loan must have the ability to pay back the loan
4) In most states the consumer must be at least 18 years old.

A typical car title loan In the state of California, for example, means you can borrow cash on the value of your auto title [pink slip], with your vehicle serving as collateral to the loan. Your credit rating or score isn’t a factor in approval, and you can borrow anywhere from $2,600 to $50,000. Your application and the loan process is kept very private and it takes less than one hour to have your cash in hand. And no matter your reasons for needing—or wanting—the money, no one will bug you with questions as to your reasons or plans for the money. In California, car title loans are typically made or arranged pursuant to a California Finance Lender’s License


2009 Payday Loans, Car Title Loans & Pawn Shop Resolution

Like most prognosticators, we expect 2009 to be a very tough year for jobs. Unemployment will certainly increase; 10% or higher wouldn’t surprise us.

But, like they say, where disaster lurks opportunity reveals itself IF you’re a “glass half full” kinda fellow.

So, in the payday loan, car title loan, rapid tax refunds, and pawn shop industries expect 2009 to experience increased demand for our products followed by a focus on collection activities.

After all, it doesn’t help much if your customers clamor for your products but are unable to pay you back in a timely manner.

Remember, it’s “all about the job”. Construction, retail and service jobs are at risk in most geographic locations. Are you up to date on what’s going on in your community? Do you know which companies are laying off and which ones are growing?

As I write this I’m in Clarksville, TN. I’ve been visiting with family and meeting with clients in car title lending and payday loans. I picked up a local newspaper and on the front page is an article about a $1.2 billion dollar polycarbonate factory coming to town. 1000 construction jobs until the factory is scheduled for completion in 2012. Then 500 manufacturing jobs will result with an estimated 8 more related jobs for every 1 factory job created by this project.

And yet, many of the small business men I’ve spoken to here are unaware of this development. You can bet the manager of the TitleMax store knows about it. In fact I went over and met with him. It wasn’t long before we began to discuss it’s implications on his business.

The point? Resolve in 2009 to always know what’s going on in your community. Join at least on of the local business organizations. Read your local paper every day. Join a charitable group.

Get involved! You’ll be glad you did. Not only will you profit but more importantly you’ll feel better!!