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Car Title Loan Business

Car Title Loans – Licensing Issues and Car Title Loan Repossessions

By: Jer Trihouse

Interested in car title loans, repos and licensing? The president of the American Recovery Assoc. and a few of our car title loan clients received the following letter from the NY state attorney general:

Dear Mr. Hall:

I am writing to you in your capacity as the President of the American Recovery Association, Inc. (“ARA”) to bring to your attention a very serious situation that may affect your members from New York State.

As you may be aware, payday loans are illegal in New York State because they violate New York civil and criminal usury laws. You will not find any “brick and mortar” payday loan companies in New York State. Payday loan companies, however, have established a presence on the internet and continue to make payday loans to New York residents, even though the loans are illegal, void and unenforceable. A particularly pernicious type of payday loan is called a “title loan.” Title loan lenders require that consumers pledge their motor vehicles as collateral for the loan. When the consumer allegedly defaults on the title loan, the lender uses New York businesses to enforce their illegal, void and unenforceable loans by repossessing the vehicle. That is where your members come in.

The Office of the Attorney General (“OAG”) is investigating a title loan company that used several New York towing and recovery businesses to repossess the vehicles of New York residents based on illegal title loans. The OAG is investigating the New York businesses as well because of their role in enforcing the illegal loans.

Under N.Y. Executive Law, § 63(12) and N.Y. General Business Law Article 22- A, the OAG is authorized to file special proceedings against businesses that engage in illegal or fraudulent business practices. The OAG believes that repossessing motor vehicles based on illegal, void and unenforceable loans constitutes illegal, fraudulent and deceptive business practices for which a court could order penalties of up to $5,000 for each deceptive act, as well as costs.

To prove its case, the OAG is not required to show that a business intended to violate the law, or that it intended to engage in fraudulent conduct or that it acted in bad faith in repossessing the vehicles. See People v. General Electric, 302 A.D.2d 314, 315 (1st Dep’t 2003) (“Although [the company] argues that it conducted its [business activities] in good faith, neither bad faith nor scienter is required under Executive Law § 63(12).” (internal citations omitted); see also State of New York v. Ford Motor Co., 136 A.D.2d 154, 158 (3d Dep’t 1988), aff’d 74 N.Y.2d 495 (1989) Lefkowitz v. E.F.G. Baby Products Co., Inc., 40 A.D.2d 364, 367 (3d Dep’t 1973) (“that [the business] acted in good faith, even if believable, is irrelevant”).

Your members should be aware that the following loans are illegal:

a. a personal loan to a New York resident of $25,000 or less from a lender that is not licensed by the New York State Department of Financial Services, and

b. the loan is for personal, family, household or investment purposes, and

c. the unlicensed lender charges an annual interest rate of more than 16%.

If the lender is a federally chartered bank, or a bank that is chartered by a state other than New York State, the loan may not violate New York law. This would rarely be the case with a title loan.

Your members should be aware that if they repossess the motor vehicles of New York residents based on an illegal title loans, they too may find themselves the subject of an investigation and an enforcement action by the OAG.

I welcome the opportunity to speak with you to discuss what role the ARA could play in assuring that its members do not enforce payday or title loans that violate New York civil and criminal usury laws.

Very truly yours,
James M. Morrissey
Assistant Attorney General

So… If you’re in a state or province where car title lending is legal, and you need help starting or improving your operation, visit: PaydayLoanUniversity.com


Taking Action in Any Vertical

How start payday loan businessYou think confidence comes from believing in yourself and accomplishing things.

But really, confidence results from having close personal relationships with people who believe in you.

So, if you focus on surrounding yourself with these people who believe in you, you’ll have the confidence to take action. (Stolen from Dane Maxwell while being interviewed by Jamie Tardy.) Google them!

92% of the “entrepreneurs” I talk to: read, study, Google, waste vendors time and ultimately do nothing. “No guts, no fame.”

Get a job or “man-up.” Lady-up if it’s appropriate. It takes “huevos” to survive in the loan shark industry. Yes, my friends, peers and clients cringe when I use that terminology (take that Scott C. :o) But, they don’t pay my bills or my property taxes here in Calif.

The OLA conference looked like a morgue. Everyone left standing looked as if they had survived the battle of the bulge. Put this temporary blip behind you! Now that we can serve consumers lacking traditional bank accounts, we have an army of 60M – 70M borrowers waiting for a smart Team to figure out how to deliver the $$ to them.

So, wake up, stand-up, find the right collaborators and get back in this small dollar loan game!

Lead prices have crashed, demand for them has tanked, more lead gens and aggregators are launching; crazy but true. Big data guys are cutting your underwriting costs.
ACH providers have jumped over board like rats but new ODFI’s are already here to fill the void.

The tribe model will persevere. It will require patience and persistence but the tribes will prevail; zero doubt!

And, if you were one of the operators employing the state licensing model due to fear, lack of guts, or shrewdness, YOU WON – so far.

Yes! The over-used word “pivot” has occurred in the PDL space. But, let’s NEVER forget that borrowers by the tens of millions are frantically searching via their smart phones, tablets, iPhones, Androids…for a LENDER TO HELP THEM.

Is that lender you? Or, are you a quitter?

Again: Disruption = opportunity. One word to describe the current state of our industry? DISRUPTION.

So, what you gonna do? I know what I’m doing? I’m buying paper at 8 cents on the dollar.

Finally, our VERY BEST WISHES TO A WONDERFUL FRIEND in the PDL space: Jerry (Jerome) Greenberg. We made a lot of $$ together. Hope he gets back in the game!! Best wishes to his family as well!!

Jer at Jer@TrihouseConsulting.com TALK TO ME! Good – Bad- Indifferent…


How Big is the Sub-Prime Car Title Industry?

'Atlanta Title Loans' photo (c) 2010, Ken Teegardin - license: http://creativecommons.org/licenses/by-sa/2.0/How Big is the Sub-Prime Car Title Industry? No one really knows. But this is interesting…

Exeter Finance Completes $300 Million Securitization
IRVING, TEXAS – Exeter Finance Corp., a specialty auto finance company, announced the completion of its second rated term securitization, issuing $300,000,000 in notes backed by subprime automobile installment receivables.

The notes were purchased by qualified institutional buyers and accredited investors in a private placement offering pursuant to Rule 144A of the Securities Act.

The four note classes carried ratings ranging from AAA/AA through BB/BB from DBRS and Standard & Poor’s, respectively. The weighted average coupon was 2.3 percent. Wells Fargo Securities and Citigroup acted as lead managers, while Deutsche Bank Securities and Goldman, Sachs & Co. acted as co-managers.

All notes included in this securitization have been sold. This announcement of their sale appears as a matter of record only.

About Exeter Finance
Exeter Finance Corp. is a specialty auto finance company based in Irving, Texas. Exeter partners with franchised auto dealers throughout the country to make car ownership a reality for consumers. Building personal relationships and providing the highest level of service to dealers and customers have been key to the company’s success since its founding in 2006. Exeter takes pride in staffing all branch offices with local decision-makers. Auto Dealer Monthly named Exeter the “Top Finance Company for Dealers” in 2010, while Auto Finance News selected Exeter for its Auto Finance Excellence Award in 2011. Please visit www.ExeterFinance.com to learn more.


Car Title Loans Businesses Return to New Hampshire

'Atlanta Title Loans' photo (c) 2010, Ken Teegardin - license: http://creativecommons.org/licenses/by-sa/2.0/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.