Category: car title loans

07
Jun

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

17
May

Payday and Car Title Loans

TEXAS CREDIT ACCESS BUSINESS PAYDAY LOANS & CAR TITLE LOANS

Filing Criminal Charges Against Consumers

Under Section 393.201(c)(3) of the Texas Finance Code, a contract between a consumer and a credit access business (CAB) offering payday or car title loans must state that “a person may not threaten or pursue criminal charges against a consumer related to a check or other debit authorization provided by the consumer as security for a transaction in the absence of forgery, fraud, theft, or other criminal conduct.”

This means that a CAB may not pursue criminal charges against a consumer unless it has specific evidence of criminal conduct, sufficient to support one of the specified exceptions. For example, if a consumer postdates a check to pay for a payday loan, and that check later bounces, this is not sufficient evidence to show that the consumer committed criminal conduct. A CAB should not pursue criminal charges in this situation unless it has additional evidence showing that the consumer intended to commit a criminal act.

Along the same lines, a CAB should not use a district attorney’s hot-check division simply as a means for collecting on delinquent loans. Generally, the hot-check provisions of the Texas Penal Code apply to dishonored checks bearing the date they are issued, where the writer of the check represents that funds are available even though they are not. Postdated checks are generally not subject to these provisions.

When a CAB accepts a postdated check or ACH transfer authorization, the CAB should understand that there might not be available funds at the time of the transaction. Before threatening or pursuing a criminal charge, a CAB should have specific evidence that the state could use to prove—beyond a reasonable doubt—that a consumer knowingly or intentionally violated a criminal law when entering the transaction. Otherwise, the CAB risks violating Chapter 393 of the Finance Code, as well as the Texas Debt Collection Act (Chapter 392 of the Finance Code).

28
Apr

Car Title Loan Biz for Sale

California Title-Finance Company Business For Sale – LA County:

Asking Price $ 3,900,000
Includes about $ 2,000,000.00 in loan Portfolios
Over 30 Title Loan Locations Throughout Southern California
3 Pawn License included in the asking Price
Potential to increase revenue by adding more accounts and remote lending outside of California * Rated A+ by Better Business Bureau

  • Gross Sales about $ 3,600,000.00 Annually
  • Nets over $ 600,000.00 Annually
  • Business Started in 2006
  • About 125 new loans per month
  • Average interest rate charged is 9% per month
  • About 2500 sqft of office space (relocatable)
  • Loans on ATV’S, Boats, Trailers, Planes, Art, Jewelry motorcycle, RV and much more
  • 15 Full time employees and about 30 part-time employees
  • Take this great opportunity to own this great business and take it to another level by bringing additional lending capital in, take advantage of the name and history of this business!
  • No gimmicks, no hidden fees, just straight shooting and fast cash!

Los Angeles, Ventura, San Bernandino and Orange County.

More Information available ONLY upon signed NDA and proof of funds!

Email Jer@TrihouseConsulting.com. Include Your name, company name, phone. Insert “Calif  Title Company” in “Subject.”

 

25
Mar

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

30
Jan

Car Title Loan Lenders Settle with Federal Trade Commission

Whatever your car title loan, payday loan, installment loan business… practices are, DISCLOSE THEM fully and simply. Do not deceive your customers or your employees.

Car Title Loan Stores  Settle Charges They Deceptively Advertised the Cost of Their Loans.  Businesses Failed to Disclose Qualifications for “Zero Percent” Loan Offers.

The Federal Trade Commission has taken action for the first time against two car title lenders, reaching settlements that will require them to stop their use of deceptive advertising to market title loans.

In administrative complaints issued against two title lenders, First American Title Lending of Georgia, LLC, and Finance Select, Inc., the FTC charged that “the companies advertised, both online and in print, zero percent interest rates for a 30-day car title loan without disclosing important loan conditions or the increased finance charge imposed after the introductory period ended.”

“This type of loan is risky for consumers because if they fail to pay, they could lose their car – an asset many of them can’t live without,” said Jessica Rich, director, FTC’s Bureau of Consumer Protection. “Without proper disclosures, consumers can’t know what they’re getting, so when we see deceptive marketing of these loans we’re going to take action to stop it.”

Car title loans are high cost installment loans with payments due over several months. The annual percentage rate of a car title loans easily exceed 300 percent. Fees add up fast and failure to pay on a timely basis results in a “repo;” forfeiting the vehicle.

The FTC charged that First American Title Lending, operating 30+ locations in Georgia, advertised a zero percent offer (in English and Spanish) and failed to disclose that the borrower had to meet specific conditions to receive that rate.

  • The borrower had to be a new customer
  • Repay the loan within 30 days
  • And pay with a money order or certified funds, not cash or a personal check.
  • If a borrower failed to meet those conditions, the offer did not apply, and he or she would be required to pay a finance charge from the start of the loan.
  • The company’s advertisements also failed to disclose the amount of the finance charge after the introductory period ended.

The FTC alleged Finance Select, doing business as Fast Cash Title Pawn, failed to disclose that:

  • Unless a loan was paid in full in 30 days
  • The zero percent offer did not apply
  • And that a borrower would have to pay a finance charge for the initial 30 days of the loan in addition to any finance charges incurred going forward.

Fast Cash, which has five locations across Georgia and two in Alabama, also failed to disclose how much the finance charge would cost a borrower after the 30-day introductory period was over.

As part of the proposed settlements with First American Title Lending and Fast Cash Title Pawn, the respondents are prohibited from:

  • Failing to disclose all the qualifying terms associated with obtaining a loan at its advertised rate;
  • Failing to disclose what the finance charge would be after an introductory period ends;
  • And misrepresenting any material terms of any loan agreements.

In addition, First American Title Lending is also prohibited from stating the amount of any down payment, number of payments or periods of repayment, or the amount of any payment or finance charge without clearly and conspicuously stating all the terms required by the Truth in Lending Act and Regulation Z.