Tag: car title


How to Start a Car Title Loan Business-Not

Six People Accused of Conspiring to Commit Loan-Sharking Involving Car Title Loans

How Not to Start a Car Title Loan Company

A multi-agency investigation has resulted in charges against six people for allegedly conspiring in an extensive car title loan scheme that allegedly defrauded unsuspecting consumers out of thousands of dollars each. Many affected consumers also lost their vehicles.

The Los Angeles County District Attorney’s Office charged the six defendants with one felony count each of conspiracy to commit loan sharking. If convicted, each defendant faces up to five years in prison. Those charged are: Alex Loxley, 39, of Santa Monica; Micayel Simonyan , 31, of North Hollywood; Walter Reyes, 28, of Los Angeles; David Watkins, 34, of Beaumont; Daniel Cool Star, 33, of Los Angeles; and Gustavo Aguirre, 33, of Glendale. All six defendants have been ordered to appear in court to answer to the charges.

The defendants are accused of making illegal loans to consumers that were guaranteed by their car titles. The charges alleged that the defendants did not have the required license to make such loans. The defendants are accused of illegally charging consumers interest rates as high as 150 percent.

Some loans were negotiated in Spanish, but consumers were not given contracts in their language as required by law.

The defendants allegedly operated several illegal car title lending locations throughout Southern California. The County of Los Angeles Department of Consumer Affairs (DCA) received complaints from consumers complaining that the defendants allegedly demanded more money than originally agreed upon, repossessed their cars unlawfully, and denied them the opportunity to reclaim their cars and/or personal belongings.

“When taking out a loan, it’s important for consumers to shop around for the best rates,” said DCA Director Brian J. Stiger. “All lenders including car title lenders must make loan terms clear so consumers can make informed decisions.”

Several other agencies participated in the investigation, including the Los Angeles District Attorney’s Office Bureau of Investigations, Los Angeles Police Department, the Department of Motor Vehicles, the California Department of Business Oversight, and the U.S. Department of Homeland Security.

DCA Investigation Leads to Loan-Sharking Charges

A car title loan, or pink-slip loan, is a small, short-term, high-rate loan that uses the title of your vehicle to guarantee the loan. These loans typically are for 30 days and have a triple-digit annual percentage rate (APR). In California, car title lenders must be licensed by the California Department of Business Oversight. You can check whether a lender has a valid license here: www.dbo.ca.gov/FSD/Licenses.

If you apply for a car title loan, it’s important to:

  •  Review the loan terms: Car title lenders must give you the terms of the loan in writing before you sign for the loan. Specifically, lenders must give you the finance charge (a dollar amount), the APR (the cost of credit on a yearly basis), and the total amount the loan will cost you. The contract has to be in the language you use to negotiate the loan.
  • Beware of the interest rate and other fees. Lenders often charge an average of 25 percent per month to finance the loan. Lenders might also charge late fees, processing fees, and title charges.
  • Know the due date: Most car title loans are due in 30 days. If you can’t pay off the loan in the typical 30-day period, the lender may offer to “roll over” the loan into a new loan. In many cases, the roll over process adds fees and interest to
    the amount you originally borrowed.
  • Avoid repossession: If you don’t pay what you owe, the lender may repossess your vehicle. This can be devastating if you rely on your vehicle to commute to and from work. Some lenders require installation of Global Positioning System (GPS) or starter interrupt devices on the vehicles so they can find them for repossession. Car title lenders must tell you if they are going to install a tracking device.

Alternatives to Car Title Loans

Before you decide to take out a car title loan, consider some other choices:

  • Take out a small loan. Consider a small loan from your bank or credit union. Some banks may offer short-term loans for small amounts of money at competitive rates. A cash advance on a credit card also may be possible, but at higher interest rates.
  • Shop for credit. Whether you’re looking for a car title loan or another form of credit, always shop for the best offer. Compare the APR and the finance charge, which includes the loan fees, interest and other credit costs. Make sure you know the total amount the loan will cost you.
  • Contact your lender if you fall behind on your payments. If you’re considering a car title loan because you’re having trouble paying bills, contact your creditors and ask for more time. Many may work with you if they see you’re acting in good faith.

If you believe you are a victim of this group or any car title lender, contact DCA for help:
DCA Investigation Leads to Loan-Sharking Charges



California PDL, Car Title, Check Cashing & Money Transfer  Business is available.
Two locations in Orange County, Calif. 
This is a great opportunity in a growing industry. Step into an 8 year old, established business and grow it.
This is a profitable business with strong day-to-day management in place. The business consists of 2 locations that can be managed from any location (Web based Loan Management Software in place).
You will need an additional $100 to $125K in working capital to make loans after sale.
Owner/seller motivated and negotiable.
Detailed Information:
Facilities: 2 Super locations. Great visibility and well maintained! Key employees in place and employee operated.
Competition: Demand for well-located, highly visible stores in Orange County (So. Calif.) is strong. Consumer demographics are ideal for these services. Since 1997, California continues to have excellent, enabling legislation and an easy path to state licensing in place. (Seller will help/advise.)
Support/Training: Extensive training and on-going support will be provided by the seller. YOU DO NOT NEED TO HAVE EXPERIENCE IN THIS INDUSTRY.
Next Step?
Provide your name, phone number and best time to call you.
NO BROKERS ARE INVOLVED! You will speak directly with the owner.
Services currently offered include: cash advance loans, title loans, tax services, check cashing and more. Revenues are consistent and a great base to grow from.
For more info regarding the macro outlook for the AFS (Alternative Financial Services Industry) see the “Highlights-EZCorp April 2013 Earnings Call Highlights” here:

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.


Arizona Payday Loan Laws and Legislation

Payday lenders in Arizona are reviewing creative methods to remain in business after the June 30, 2010 ban of the payday loan industry.

Payday loan lending businesses are now prohibited from operating in the state and, as a result, many Arizona payday loan lenders are considering converting to car title or auto-title loans and check cashing operations, which may be legal under Arizona law. Payday loan lawyers and compliance experts are researching these business models now.

Our clients and others are weighing the advantages and feasibility of switching to car title or auto title loans in order to continue to serve their customers. Demand for simple, no-hassle, minimum documentation micro-lending products remains huge! Unfortuately, Arizona Regulators fail to realize this demand. So, the Regulators simply outlawed payday loans leaving thousands of Arizonan’s without access to $300 to $1500 loans.  Check cashing services have also grown amid tighter state regulations.

The payday loan industry faces increased regulations from many states. Payday loan lenders narrowly escaped the financial regulatory reform bill, which would have required federal oversight of the payday loan industry. Millions of consumers through out the country welcomed this development as their ability to choose the payday loan product to solve short-term financial problems is a high priority.


Collection Strategy No-No for PaydayLoans, Car Title & Check Cashers

Collection Strategy No-No for PaydayLoans, Car Title & Check Cashers

In our industry, you’d better “get” collections. Comprehending Federal and state collection practices are crucial to us. After all, we’re really a “collections business.”

So… if you get anything out of this short Blog let it be this:

Bottom line, DO NOT CALL your customer at their employer once you’re told it’s unacceptable.

Case in point, a West Virginia resident Woman sues over collection calls at work

A  West Virginia woman claims she suffered “humiliation, embarrassment, mental anguish and emotional distress after a debt collection agency repeatedly called her at her work.”

Amy Wellman filed a lawsuit Feb. 3, 2010 in U.S. District Court for the Northern District of West Virginia against Martin and Seibert .

Wellman claims she began receiving phone calls from Martin and Seibert regarding collection for her debt in July 2009.

“When Plaintiff was first contacted by a representative of Defendant at Plaintiff’s place of employment, she requested that the Defendant cease placing telephone calls to her place of employment regarding the alleged debt,” the suit states. “Despite her request, Plaintiff continued to receive telephone calls from Defendant’s representatives at her place of employment. Plaintiff often hung up the phone on such occasions, but Defendant’s representatives would call back immediately thereafter. On numerous occasions Plaintiff reiterated to Defendant’s representatives her request not to be called at work too often explaining that calls of such a nature were not allowed by her employer.”

Wellman claims Martin and Seibert violated the Fair Debt Collection Practices Act and the West Virginia Consumer Credit and Protection Act by communicating with her at her place of employment and by continuing to call her with an intent to annoy and harass her.

In the two-count suit, Wellman seeks actual and compensatory damages, statutory damages of $1,000 for each violation of the FDCPA, attorney’s fees, costs and other relief the court deems just.

U.S. District Court case number: 10-CV-5

Just imagine this strategy being used by you in your business and a friendly class action lawyer getting a hold of you?

Don’t do it! Did you read our previous “Text Messaging Article?” There are plenty of methods you can employ to perform your collection efforts. Educate yourself and your team. Proper collections activities are micro-lending 101.