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