Tag: car title loan


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


#1 Challenge for Payday Loan and Car Title Loan Lenders

We took a 30 second survey asking payday loan and car-title lenders what their biggest problems are. We’ve received over 1000 responses and continue to receive more daily.

(By the way, this is an ongoing “30 Second Quick and Dirty PDL Survey” you can access here: http://goo.gl/iDX6T This is the link to the Survey Page using the Google Shortener Tool.! If you take it, we’ll share our results with you! Experience of our respondents to this Survey varies from zero to 20+ years. The average is 3.3 years)

Before we reveal the #1 challenge revealed by 1000+ payday loan and car title loan business professionals, here’s a brief rundown of the other top responses to our quick and dirty survey in no particular order:

  • Collection tactics and underwriting and tools
  • Hiring and keeping good employees
  • New products and services that can be added
  • How to generate/buy/sell  Internet leads
  • Access to capital to grow your business
  • Adapting to Government and legislation
  • How to harness the Internet to increase revenues and collections
  • Payday loan and car title loan software selection and issues
  • Finding good locations and accessing their potential for success
  • Developing and maintaining a good quality industry image
  • Developing new business models in addition to the State Law Model, the Choice-of-Law-Model, the Sovereign Nation Model, the Offshore Model, the Peer-to-Peer Model, Installment loan products…
  • Training in all aspects
  • Legal questions about laws, organizing the business, Internet licensing
  • And a hell of a lot more…

So… drum roll please… The #1 challenge  revealed by our readers for help and insight?

“Getting more customers.”

Alright, let’s tackle this issue.  First things first – DEMAND is UP! Yep, hopefully that doesn’t surprise you!

I talk to entrepreneurs in the payday loan industry, car title loan industry and many related  AFS businesses (Alternative Financial Services) everyday. These business people call and email me from everywhere … from the USA, Canada, the UK, Australia, Korea, Africa, Mexico, New Zealand… and DEMAND is up. Customers want and desperately need our product; short-term, no-hassle quick access to small loans.

Sure, our demographics are changing! Potential customers with multiple credit cards and higher incomes  – customers who previously wouldn’t consider us for temporary financial help – are now considering us and actually using us. And many of our past customers are unemployed! Las Vegas has a 15% “official” unemployment rate! The “official” rate in California is 14%; we know among our customers it’s higher! So demand isn’t down it’s just that our customer is changing.

The problem is we’re all going after the same customer in the same ways while our customer has changed. These potential customers listen to different radio stations, watch different TV stations, read different web sites and blogs, drive different cars, read different magazines and newspapers, use Facebook, Twitter and Google … And these customers are applying for our products and services in multiple ways! It’s not uncommon for them to make a phone call, visit a store and apply via a web site! Our customers have “MOVED.”

These customers are more sophisticated. They have better educations with higher expectations. They are more aware of their options and require more attention.

I can’t use this Newsletter issue to discuss every method available for you to get more customers. It’s a HUGE subject and I’ll discuss more in coming issues.  So let’s begin here with one thing you can do to make an immediate impact on your revenues; it’s simple BUT not the easiest tactic to implement.

It’s called HOSPITALITY!

Yeah, that’s correct – HOSPITALITY.

So… what do I mean by HOSPITALITY? Well, as Danny Meyer states so eloquently in his book Setting the Table, The difference between SERVICE and HOSPITALITY is the foundation of success. SERVICE is the technical delivery of a product. HOSPITALITY is how the delivery of that product or service makes its recipient FEEL. SERVICE is a monologue – we decide how we want to do things and set our own standards for service. HOSPITALITY, on the other hand, is a dialogue. To be on a guest’s side requires listening to that person with every sense, and following up with a thoughtful, gracious, appropriate response. It takes both great service and hospitality to rise to the top.”

On a superficial level, “Setting the Table” is a book about starting and running retaurants; some of the best restaurants in the world. But on a higher level, it’s about business and customer service. I highly recommend it to you!

There’s a story that a business man opened a new store in Florida. On the day the business opened, the business owner received a surprise phone call from Gov. Jeb Bush. Gov. Bush thanked the business owner for doing business in Florida and offered this business man a “special phone number” should he ever need anything. Imagine the impact with your new customers if your company used this tactic. And imagine the fantastic feedback and insight you can receive from your customers.

“Hello Mr. Jones. This is Jerry Ayles at San Diego Financial Service Centers. May I take a few seconds to thank you for visiting our store/web site this week.” THEN SHUT UP! Listen! Allow your customer TO BE HEARD! People love for you to show a genuine interest in them. There is no stronger method of developing a relationship with another human being than to display a true interest in THEM and allow them to share their experiences, their stories, and their lives with you.

OK! I know what’s going on in your head right now! You’re thinking, “Is Jer nuts? Does Jer really think I have time for this?”

My answer to you is, “Can you afford NOT to do this?” Time and time again, I’ve written about the life-time value of your customer. Let’s review this quickly here again. Say… 4 loans per year… $300 per loan… $45 in fees per $300 loan = $180/year in fees X 10 years = $1800 total life-time revenue per customer. And these are conservative numbers! Substitute your own fees and average loan amount and the number of years this customer will stick with you.

Isn’t it worth 2 minutes of your time (or the time of a well trained member of your staff) to implement this?

How can you afford NOT to do this? How can you afford NOT to gain unbelievable insight into what’s going on in your customer’s head? How can you miss an opportunity to gain another apostle for your business? How can you fail to ask them for referrals of their family and friends? How can you afford to fail at this simple strategy?

Final thoughts: When you’re fortunate enough to entice a new customer to give you a try you’d better hit a home run with them on their first experience with you. Again, as Danny Meyer’s writes, “Your goal MUST BE to earn, regular, repeat patronage from a large number of consumers.” AND don’t think I mean putting them on a path to the so-called “cycle of debt.” I simply mean earning their trust and respect as they become acquainted with, and actually use, a variety of the products and services you offer in your financial service center.

Now another thing YOU MUST DO! Get your customers email addresses, Facebook accounts, twitter accounts… Ah!!!!!!!!! This thing is too LONG ALREADY. Next time…

As others have said, “Excellence is a journey, not a destination.”

Meanwhile, WHAT DO YOU THINK? Comments, suggestions, your ramblings are DEMANDED ?




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.


Car Title Loan Business – How to Start

Virginia car title lending laws have been modified. A Virginia car
title loan business will still prove to be quite profitable. However, you’ll want to be familiar with these rate changes. Not in Virginia? Look for links to your state as well.

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Virginia car title loan interest rate caps:

•22% per month (264% APR) for that portion of the loan under $700

•18% per month (216% APR) for that portion of the loan between $700
and $1,400

•15% per month (180% APR) for that portion of the loan exceeding

Also, car title lenders must give a 10-day notice by mail before repossessing a
vehicle and must give a 15-day notice before selling the car after repossession.

The Virginia Consumer Finance Act prohibits unlicensed lenders from charging
and receiving interest in excess of 12 percent per year on consumer loans.


How to Start a Payday Loan Business

Starting a payday loan business has never been easier. Sure, there are some state or provincial regulatory issues to deal with. And you’ve got to navigate through the business structure scenarios available to you; LLC, S-Corporation, C-Corporation, Sole-Proprietorship, etc. ( A good introductory to this subject is Garrett Sutton’s book “Why Form A Corporation” from the “Rich Dad Poor Dad” book series). And yes, we know the Obama administration has lot’s of ideas that will eventually impact the payday loan, car title, check cashing and RAL ( Rapid Tax Refund ) industries. But hey, these little impediments simply eliminate the entrepreneurs lacking drive, ambition, guts and a degree of risk tolerance.

“Ease of entry” is a term that’s often tossed around by knowledgeable folks when considering entry into a new business. Mature entrepreneurs realize that barriers to launching a new business, like the payday loan or car title loan niches, are simply opportunities for them. They realize most people are simply lazy!  They want instant gratification. They want everything laid out for them. Actually they want everything done for them; and, they want it all done for free.

The point is, if it’s easy to enter a new market, a new niche, a new industry, and the perception is that a ton of money is being made, then competition will certainly appear. On the other hand, if on the surface, the general consensus is that it’s too difficult to jump through the hoops required to enter an industry such as payday loans, the typical new business dreamers will never do the work or perform the research to enter that market and compete. And that can be a good thing and a bad thing…

Why? Obviously it’s good when you’re in an extremely lucrative market and you have little competition. However, there is strength in numbers. There is strength when a significant number of competitors exist in a market having large numbers of customers. A large, competitive industry with large budgets can communicate their products and services benefits to consumers, the media and legislators. PAC’s (Political Action Committees) can be formed to fight regulatory encroachments by competing industries – such as banks and credit unions versus payday loans and car title loans.

The consumers, employees and businesses offering and using our services are voters. Obviously, the more voters who understand the benefits of our products the better our ability to survive. Never doubt that there are a great number of other industries that want our customers badly. They would love to see us go away! And they will use every ruse and distortion to accomplish their goal of eliminating us.

As a side note, it’s interesting that whenever actual customers, that is actual users of our products and services are interviewed, we are viewed quite favorably when compared to banks, credit card companies and more.

So… if you’re interested in starting a payday loan business, entering the car title loan industry, offering Rapid Tax Refund products or, for that matter, starting any kind of business that is new to you, do not fear the initial difficulties you’ll encounter. Consider these impediments to simply be part of “weeding out the chafe;” the elimination of the lazy and the incompetent.