The car title loan business is returning to New Hampshire. Legislators had hoped banks and credit unions would enter the market and fill the void when payday loan and car title loans were reduced to 36% APR’s by the regulators in 2009. This never happened. Instead, New Hampshire residents were simply deprived of another choice for navigating temporary financial challenges.
When state lawmakers capped the interest rates on payday loans at 36 percent in 2009 payday loan and car title loan lenders left New Hampshire in droves.
In 2012, the New Hampshire Legislature reversed the interest rate cap on title loans, overriding a governor’s veto to do it. Now, lenders can charge a monthly interest rate of 25 percent, the equivalent of nearly 300 percent over 12 months.
A car title loan is secured by a signature and a vehicle title. There is no credit check or verification of a borrower’s income, and a borrower can get access their funds immediately.
Under the New Hampshire car title loan law, lenders can loan a person up to $10,000 and no more than 35% of their total gross income. The New Hampshire title loan law allows lenders to renew the initial 30-day loan for 10 months. The title loan lender can charge 25 percent interest each month. A borrower must pay at least 10 percent of the loan’s original principal each month.
If the borrower fails to pay-off the principal, the lender can find them in default and take the car, motorcycle, recreational vehicle, or boat. Rather than a repossession, a better strategy is for a car title loan lender to reduce the loan principal on which they charge interest and create a win-win for both the borrower and the lender. We don’t want the vehicle.
An example:
A loan principal of $1,000 loan; the lender might charge 25 percent interest the first month on the entire $1,000. If the loan is unpaid after one month, and and the borrower renews it, the title loan lender might charge interest on $900. The following month, the might charge interest on $800, etc.
If the title loan lender eventually repossess a borrowers’ car for nonpayment because the borrower refuses to contact and make any attempt to work with the lender, the lender could sell the vehicle and keep what they are owed. Any additional monies remaining after the sale must be returned to the borrower.
Visit http://www.AutomobilePawn.com for training and strategies for starting a car title loan business.
