THE BLOG

10
May

Sub-36% APR Vehicle Title Loans, Google Adwords, Finova Financial & Making Money by Lending to the Masses

Posted by / Uncategorized

We lenders are a creative bunch! State or FED mandated 36% APR maximum?

I now introduce Finova Financial – online vehicle title loans – as a case study in advertising sub-36% APR’s while achieving a nearly 200% APR.

I toss this out to help you and your Team get your creative juices flowing. A little inspiration…

PS: I’m not a lawyer! Don’t make these loans without competent legal advice! AND, this piece is long. If you prefer mickey mouse “Click Bait” content visit Buzzfeed.com

Finova is a 100% online, mobile, anywhere 24/7loan platform advertising a line-of-credit loan product collateralized by the title to a car. “Complete the loan process online, instant approval, with same day cash funding.” In reality, the borrower receives a lump sum when the loan is approved. Roughly 2,000,000 title loans were funded last year in the USA; obviously not all by Finova. Finova is operating in 7 states last time I counted.

The typical Finova title loans are amortized over 12 months; no balloon at the end. The loan transaction does NOT require any face-to-face interaction. Hint: borrowers who lack bank accounts make their monthly payments via MoneyGram’s 30,000+ locations [MoneyGram fee is $11.00 each] or by credit and debit cards.

To be crystal clear how these vehicle title loans work, here’s a testimonial posted by a happy Finova Financial client taken from their website:

Finova had the whole “take a picture and text it” text message. I clicked on it which made it easier to be able to upload everything. Everything was done electronically and I didn’t have to go to a location. I had to mail off my title but other than that I didn’t have to go into an office and sit down with anybody. [Full testimonial below.]

According to Finova’s last “Pitch Deck:”

  • Their average loan size is $1,665.
  • Life of Loan is 12 months.
  • Target revenue is $3,060.
  • They have a 10% retention rate at maturity.
  • Estimated Customer Lifetime Value [CLTV] $3,366.
  • Client Acquisition Cost [CAQ] $88.
  • CLTV/CAC = 38X
  • Avg. 1st customer payment $298.
  • Clients have returned up to 5 times for new loans.
  • 15% of the portfolio has had multiple Finova loans.
  • Avg. Loan to Value [LTV] 30% of retail value
  • <50% of Blackbook Rough Wholesale value.
  • <10% default rate.

The vehicle title loan funds are credited to the borrower via ACH, retrieved at MoneyGram or in the ideal Finova scenario, to the privately branded Finova Secured Debit Card.

According to publicly available info posted on Nerd Wallet, [As I understand it, NerdWallet Co-Founder Jake Gibson participated in one of the capital raise rounds for Finova Financial] “a typical Finova Financial customer borrows $1,700 and qualifies for an APR of 22.5%. Finova’s stated APR ranges from 17% to 30%, but adding fees and the cost of insurance for a $1,700 loan, the effective APR is actually 187%.”

So, how does Finova Financial achieve these >36% APR’s?

And how is it that Finova can participate in the Google Adwords program? How can Finova Financial be compliant with Google’s loan advertisement policies?

Let’s count the ways…

A 36% APR? Don’t ASSume that means you can only charge your borrower $360 per year for a $1000 loan!

Know this about APR’s:  The Annualized Percentage Rate is defined as the annualized finance charges expressed as a percentage of the amount financed. This rate has to be disclosed in the contract under the TILA. The stated APR includes certain fees, such as origination, that the interest rate does not; both exclude costs for ancillary products.

Example?

Finova Financial offers a Car Equity Line of Credit (CLOC) via a cloud-based, digitally delivered  loan – No Brick and Mortar locations –  based on car equity and the “Finova Automobile Secured Prepaid Card,” which accepts either cash or car equity to fund the card.

This group is SMART!

Here’s what one customer wrote about them on their website:

“Finova had the whole “take a picture and text it” text message. I clicked on it which made it easier to be able to upload everything. Everything was done electronically and I didn’t have to go to a location. I had to mail off my title but other than that I didn’t have to go into an office and sit down with anybody. I had a digital title which was a pain in the butt but Finova was awesome with their help. I dealt with two different people because I called when one had already gone home. They picked up seemingly with no problem, so it made me feel good that they work so close together that if someone wasn’t home, the process doesn’t stop.”

“Also, I enjoy the fact that I got the reminder text because it helped me make my first payment. Everything was good to go and I was able to make my payment on time. Plus the ease of being able to make a payment is spectacular. You just go right to Walmart or wherever you want and make that payment with no problem.”

Finova Financial advertises <36% APR loans.  Google accepts their advertising! So how does Finova achieve 100%+ APR’s?

Again, according to Nerd Wallet:

Finova funds a client $1,700. The average borrower qualifies for an APR of 22.55 [This depends on where the borrower resides.] Finova’s stated APR ranges from 17% to 30%, but adding fees and the cost of insurance for a $1,700 loan, the effective APR is actually 187%.

Here’s a breakdown of the costs associated with Finova loans:

  • Extra fees: Not all fees are included in the APR you receive. On top of the rate you qualify for, you’ll have to pay a $25 “credit investigation” fee.
  • Insurance costs: Finova requires borrowers prepay for 12 months of comprehensive and collision insurance or buy an optional form of insurance from the company, known as a “DCC – debt cancellation addendum.”
    • Finova requires that their borrower provide Finova with proof of comprehensive and collision insurance on the vehicle, with a deductible of $500 or less, through a properly licensed insurer. Such insurance must be reasonably acceptable to Finova, name Finova as loss payee, and show proof the policy is paid through the maturity date of the loan. In the event that you do not provide adequate proof of such insurance, you must obtain Finova’s Voluntary Debt Cancellation Addendum.

Finova’s customers are typically sub-prime vehicle title loan borrowers. They don’t have the CASH to pay up front to an insurance company for a $500 comprehensive and collision insurance policy. So… MANY Finova Financial vehicle title loan borrowers ELECT to purchase DCC coverage.

What’s that you ask? What is a Debt Cancellation Contract (DCC)

According to Investopedia:

A debt cancellation contract (DCC) is contractual arrangement modifying loan terms. Under the debt cancellation contract, the Lender agrees to cancel all or part of a customer’s obligation to repay a loan or credit. These contracts become effective upon the occurrence of a specified event as written into the contract. A debt cancellation contract (DCC) provides for the cancellation or suspension of loan payments when it becomes difficult, or impossible, for the borrower to make payments. These events may include an accident or the loss of life, health, or loss of income. Other reasons for debt cancellation include military service, marriage, and divorce. This product is also known as a debt suspension agreement (DSA)

DCC’s do not sell through insurance agents, brokers, or other intermediaries. They are a feature of the extension of credit, provided by the Lender.

DCC terms and costs are designed by the Lender.

DCC’s supposedly increase borrower “loyalty and satisfaction.”

DCC’s offer fee income potential for the Lender

There are NO licensing restrictions for selling DCC’s.

The Lender determines the borrower’s price for the DCC.

Here’s a link to a typical DCC provider: https://www.avpadmin.com/lenders/

Now, we all know that consumers are not nearly as dumb as the folks in D.C think they are. Our customers are simply budget constrained; big time! Several focus groups have revealed that a surprisingly large percentage of consumers know the difference between stated and all-in APR’s. “There’s a big difference between the [stated] percentage rate and what you’re really being charged.”

Pew has some interesting revelations and stats here: PEW

From PEW:

As an example, a stated APR for a nine-month, $511 loan issued in Kentucky was 43 percent, but the all-in APR was 138 percent.”

Because the lender sold credit insurance with the loan and financed the $203 lump-sum premium, the amount financed increased from $511 to $714, which resulted in higher interest and other charges.

 When all the fees and insurance premiums were included, the all-in APR was 138 percent, three times more than the stated APR.

Depending on the state, Lenders are typically allowed to sell the following types of “insurance:”

  • Life: repays a loan’s outstanding balance to the lender if the borrower dies. The payout decreases the longer the loan is outstanding because the policy covers only the remaining loan balance.
  • Accident and health or disability: Makes the monthly payments to the lender if the borrower becomes disabled during the loan term, continuing until the borrower recovers from the health issue or the loan term ends, unless other policy restrictions apply or limit coverage.
  • Involuntary unemployment: Makes required monthly payments to the lender if the borrower loses his or her job during the loan term until the customer finds new employment.
  • Property: Covers the value of property pledged to secure a loan if a lender is unable to repossess the property for any reason.
  • Nonfiling: Protects lenders against losses up to the value of the collateral in the event a borrower defaults and the lender did not undertake the time and expense to file the paperwork to register a security interest in the property.
  • Installment lenders also are often allowed to sell accidental death and dismemberment insurance that makes loan payments if a qualifying event occurs.
  • Lenders can also sell auto club memberships and automobile security plans.

WTF? Blockchain next for Finova Financial?

That’s another Post. Read about Finova’s plans for raising capital via Blockchain here: Finova Financial & Blockchain.

24
Apr

Title Loan Lenders Getting Scammed by Phony .VIN Websites

Posted by / How to Start

If you’re a title loan lender, read on. If not, DELETE NOW.

We offer car title loans in more than a few states.

In Los Angeles, we charge 8% to as much as 18% per month on the loan principal. Depends… Heavy competition!

In Texas, it’s closer to $25/per $100 borrowed.

Every state is different.

Pretty good ROI when everything goes as we planned, right?

We ultimately repo roughly 7% and sell them in order to recover our loan principal.

Sometimes we conduct private sales. Other times, we just run them through the local auction.

Among others, we use CarGurus.com… to list cars for sale.

Lately, our CSR’s are  getting calls and texts from people who claim to be interested in buying our car – but first want to see a car history report.

They request we  get this “car report” from a specific website.

This website requires some info AND pay $20 by credit card for the “report.”

We empower our CSR’s with a LOT of decision making!  One of our CSR’s sent this “report” to the supposed buyer but never heard back.

Weird, huh?

Well, it gets weirder.

The FTC put out the following PR piece about this very thing recently. My Team and I missed it!

This happened to us! Don’t let it happen to your car title loan business.

Here’s what the FTC suggested:

It turns out that when car sellers go to one of these websites, they’re automatically redirected to sites ending in ‘.vin’

Seems like it might be related to your car’s vehicle identification number or VIN, right?

Scammers hope you’ll think that too.

In this case, .vin is a relatively new website “domain” – like .com or .org – that groups can apply to use.

This domain was intended to be used for sites that relate to wine, since “vin” is the French word for wine, but others are not prevented from using it.

So yes, that’s a clever take on .vin for cars, yes, but you still might want to think twice if anyone asks you to do car-related business on a site ending in .vin.

So, if you are selling a car online and someone asks you to get a car history report from a specific site, ask why and think twice.

You may have no way of knowing who operates the site, especially if it’s one you’ve never heard of.

It might be a ruse to get your personal information, including your credit card account number.

It also could be a way for “lead generators” to get information, which they sell to third parties for advertising and marketing purposes.

Your best bet: play it safe.

Go to ftc.gov/usedcars for information on vehicle history reports, recall notices, and how to learn whether a car has been declared salvage.

For example, the National Motor Vehicle Title Information System (NMVTIS) operates vehiclehistory.gov, which lists NMVTIS-approved providers of vehicle history reports. Not all vehicle history reports are available through the NMVTIS website.

Reports from other providers sometimes have additional information, like accident and repair history. Whether you’re familiar with a company or not, it’s always helpful to see what other people are saying online. Simply enter the name of the company, and words like “complaint,” “review,” “rating,” or “scam.”

Meanwhile, go make SOME SERIOUS $$$ in the car title loan business!
Starting a Title Loan Biz? Go here: https://www.AutomobilePawn.com
Jer – Trihouse 702-208-6736 Cell
Knowledge Store: Resources for Lending $$ to the Masses!
https://www.PaydayLoanIndustryBlog.com

27
Feb

36% APR for Loans? Payday, Title, Installment Loan Biz

Posted by / Profits

What is your take on the bill introduced reducing the interest rate to 36% APR? Thanks, Roger P.

Great question. 

I don’t “worry” about it. I’ve been lending since 1998; Garden Grove, Calif. was our 1st location.

New legislation introduced/defeated/passed… is part of the business of lending.

There are simply too many creative lenders, a daily improvement in tech, fraud prevention, a downward cost trend on loan underwriting, improved collection tools… and unquenchable consumer demand for loan products to ever kill “the business of lending money to the masses.”

36% APR? Who cares. Look at this lender to the military for just one example: OmniMilitary Loans. They advertise loans up to 35.99% APR.

Dig through all the fees. They often exceed 200%. Admin fee, debit card funding fee, they encourage “renew loans” after 4 payments, payments made via allotments… These folks have nowhere to go when faced with a financial challenge! “Thin-file; No-file; build credit; basic 101 tools…” I’M NOT PICKING ON THIS TEAM! They are offering a service that appeals to a huge demographic. A demographic who VOTES by choosing OmniMilitary to solve their financial challenge.

Look! It sucks when you’re in a financial bind. I’ve been there. That’s how I learned about the payday loan industry. But when the car needs fixing, the reconnection fee for keeping on the lights, the money for rent/food/prescription… you name it, runs out, who you gonna call? Your local “consumer advocate?” Your banker? Your credit union? Your mom? Big brother? Nancy Pelosi? Bernie Sanders? You do what you have to! Hopefully, you have several CHOICES for solving your immediate problem.

Lacking multiple financial choices forces consumers facing credit challenges into using bank and credit card NSF/Overdraft fees to deal with emergencies. These “products” approach 1800% APR’s! AND, the banks and credit unions incur virtually ZERO risks! They get access to the borrowers’ bank account before ANY other lender! So-called “consumer advocates” refer to “alternative lenders” as “loan sharks? Man, look in the mirror, Bankers! Alternative financial lenders deposit cash into a borrower’s bank account and then literally pray they get paid back! This is simply not the case with bank products.

From BankRate.com: “While banks were technically earning a bit less from overdraft fees in 2017 than they were the previous year, they remain a key source of revenue for many banks. And despite political pressure, overdrafts fees are unlikely to fall significantly in the coming years. “

I’m not going to preach to the choir! I’m ASSuming you are a member!
SUGGEST YOU READ: “Debt: the First 5000 Years” and “The Ascent of Money” for perspective. 
Jer – Team Trihouse702-208-6736 AND yes, I am biased. I admit it.

How to Start a Loan Business
Click the IMAGE to Start a Title Loan Business
27
Nov

Car Title Loan Business Profits Explained-Google Searches for Car Title Loans Increases 33%.

Posted by / How to Start

Are you in “the business of lending money to the masses?”

Do you still think of yourself simply as a payday loan lender? A check casher? A bail bondsman? A personal or installment loan provider?

If you do, you are WRONG! You’re a “Financial Service Center.” You sell money! You sell money in the form of loans. Car title loans. Payday loans. Personal loans. Installment loans.

Does you business offer car title loans? No? Big mistake! Plenty of money to be made with a lot less risk!

Google says “car title loan” searches are up 33%. Here’s the proof:

how to start a car title loan business

Per Google: Car Title Loan Searches Increase 33%

What’s this mean to you? Millions of consumers in the USA want to borrow money by putting  the title to their car up as collateral! Why is that a big deal? Because, if you’re a lender, your loan is collateralized by the car. This is not your mommy’s typical high risk payday loan.If a car title loan is not paid back, the lender takes the collateral- the car!

How’s a car title loan work?

Use one of the many tools revealed in our Manual: “How to Lend Money to the Masses” to determine the “low book value” of the car in your geographic area. Agree to loan up to 50% of this “low book” value to your car title loan customer. Our Course walks you through how to legally become the title holder on your borrower’s car. Then, depending on the state you operate in, you charge fees and interest to this borrower.

EXAMPLE: We operate in Calif. The law allows us to charge any amount we like as long as the loan amount is greater than $2500. The going rate today in Los Angeles varies from 8% to as high as 18% paid monthly on the loan principal.

THE REAL WORLD MATH! So, a Ford pickup that “low books” at $9K warrants a car title loan in the amount of $4000 at let’s say 9%/month. Until this Ford truck owner pays off the $9K, they will be paying you $360/month, month after month after month… in fees.

Worst case? Eventually they stop paying you? You email your repossession service – revealed in our Course. This repo service scans tens of thousands of license plates in Wal-Mart, Best Buy, Target… parking lots. In a few hours/days they get a “hit.” This repo service hooks up the car, delivers it to the auction where it’s refurbished and sold in one of the auction lanes.

The auction sends you a check. How big? In the real world?

Low book value was $9k. Let’s assume the borrower has been paying you $360 per month for 9 months [$4000 loan at 9%/month payment. So… after 9 months this Ford truck is a little worn. It brings $7500 at the auction. The auction charges you $150 refurbishing fee [high] and $350 to perform auction services [high: include repo charges]. You net $7000.

Summing up:

  • You loaned the owner of this Ford truck $4000.
  • You received 9 payments of $360 = $3240 [Note these are FEES NOT LOAN PRINCIPAL PAY DOWN!]
  • You received $7000 from the auction
  • In total, over this 9 month period, you received $10,240 [$3240 + $7000 = ]. You loaned the Ford truck owner $4000. Your NET is $6240.
  • That’s a 253% ROI on your money in .7 years [270 days]

The more likely scenario? The one we experience?

We have car title loan clients who have customers that continue to pay their monthly fee payment for YEARS! In this example, $360/month year after year! The result? After a car title loan borrower pays $360/month – month after month – they still owe you the $4000 loan principal!

Get started now! Let us teach you how we do it. Learn “The Business of Lending Money to the Masses” today.


02
Aug

Ohio Payday Loan Law

Posted by / Uncategorized

According to Ken Rees at Elevate: “Ohio’s new Fairness in Lending Act will likely reduce credit availability, potentially creating increased demand for Elevate’s Elastic and Today Card products, which he indicated would be acceptable under the new law. The new law does the following:

  • Limits loans to a maximum of $1,000.
  • Limits loan terms to 12 months.
  • Caps the cost of the loan – fees and interest – to 60 percent of the loan’s original principal.
  • Prohibits loans under 90 days unless the monthly payment is not more than 7 percent of a borrower’s monthly net income or 6 percent of gross income.
  • Prohibits borrowers from carrying more than a $2,500 outstanding principal across several loans. Payday lenders would have to make their best effort to check their commonly available data to figure out where else people might have loans. The bill also authorizes the state to create a database for lenders to consult.
  • Allows lenders to charge a monthly maintenance fee that’s the lesser of 10 percent of the loan’s principal or $30.
  • Requires lenders to provide the consumers with a sample repayment schedule based on affordability for loans that last longer than 90 days.
  • Prohibits harassing phone calls from lenders.
  • Requires lenders to provide loan cost information orally and in writing.
  • Gives borrowers 72 hours to change their minds about the loans and return the money, without paying any fees.”

Read the story here.

15
Jun

Title Loan Business Plan

Posted by / Profits

Car Title Loan Business Plan: How to Start a Title Loan Company

You want to make serious money by lending money to the masses or you would not be reading this.

To be successful as a lender – or in any other entrepreneurial endeavor – you really only have to be good at  a few things:

  • Picking the right business niche
  • Raising money
  • Hiring good people
  • Ability to iterate through challenges
  • Be bold. DO OR DO NOT!

Pick the Right Business Niche

Let’s get real!

Lending money to the masses can be very profitable!

Payday loans, signature loans, car title loans, personal cash advances, merchant cash advances, business to business loans… whatever you call them, all can be very profitable.

Real world example?

We’re charging $15 to $30+ for every 14 day loan we make. [Depends on the state we’re in or the tribe we collaborate with.] That’s a 400%+ annual percentage rate (APR) for a borrower to use our money for two weeks.

I’ve watched stores reach $10,000 in loans after only being opened 3 weeks; within a year, $100,000 on a good week and generating $50,000/month in fees.

Sure. Lenders have costs. Payroll costs, utility costs, website costs, merchant processing, rent, legal, taxes… but you get the picture.

A lender’s inventory is MONEY!

It’s not flowers that die on you. It’s not food that rots. It’s MONEY, MOOLAH, COIN, DINERO, SCRATCH $$. NICE!!

DONE! I’ve established that the business of lending money to the masses is very profitable!

How to Start a Loan Business

Click the IMAGE to Start a Title Loan Business

Raising Money

This is a mindset. It’s about presentation. Practice getting good at distilling your idea into a bite sized amount. Get your business launched.

I’m not taking about immediately achieving huge scale. Just get your loan business open for business and fund a few loans. Store front, Internet, mono-line, combo… just fund a few loans!

Next?

Friends, family, peers, members of your network… will find out what you’re doing.

They will want to learn more. Don’t be shocked when they say something along the lines of, “I have $20K sitting in the bank earning 1% per year before taxes and inflation. Could you put my money to work in your new business?

Of course you can! Offer them 6%, 8%, 10%+ per year. You can afford it when you’re grossing 500%+ APR’s on your loan portfolio!

NOTE: Not sure how I’m calculating these APR’s? Go here: Sample APR Calculations

Hiring Good People

If you’re good at raising capital, you can hire people to do everything else. You can hire a CEO. You can hire a lawyer. You can hire an experienced customer service representative.  You can buy “off the shelf” loan management software. You can subscribe to a sub-prime consumer credit reporting service.

You can hire great people to do any part of this business you choose to. YOU GET MY POINT!

To hire right, you need a big funnel. You have to sort through a ton of leads. You need a system; an onboarding process. You’ve got to learn how to do this! [This intel is in our “How to Start a Loan Business.”

The quality of your life is about the people around you.

Everything that bad happened to you in the last 10 years did not happen in a bubble.

Someone either DID or DID NOT do something to you.

That’s life.

Most problems in life are people problems.

We let the wrong – or right – people into our lives.

In business there are some whack jobs! Don’t let them in!

Now go out and BE BAD!

Jer – Trihouse Consulting TrihouseConsulting@gmail.com

http://www.PaydayLoanIndustryBlog.com

http://www.AutomobilePawn.com

04
Apr

Open a California Car Title Loan Business

Posted by / California

How to Open a Car Title Loan Company

For both car title loan lenders and their customers: California

Exercise caution before borrowing money via an automobile title loan.

Title loans require the borrower to sign over the title (pink slip) to your car, RV, motorcycle, boat, mobile home as collateral for your title loan.

If you miss payments or default on your car title loan, the lender can take your vehicle.

Tips for consumers considering an auto title loan:

  • Borrow only as much money as you can afford to fully repay when the payment is due.
  • You have the right to full disclosure in your contract of all interest charges, the annual percentage rate (APR) of the loan and all fees.
  • The final contract must be in the language in which you negotiated it.
  • Before you take out a title loan, read the contract thoroughly and be sure you understand all the terms.
  • Once the title loan agreement is signed, you are legally responsible to fulfill the obligations in the contract.
  • Be aware some title loan lenders use remote engine shutdown devices that allow them to turn off your car if you don’t make payments. Some of these devices have GPS tracking capability.
  • These car starter interrupt devices must be disclosed to the borrower.
  • Car title loans are quick and easy to obtain but borrower’s will “pay through the nose” to get one.
  • Borrowers should reach out to family, friends, peers, church, their employer… all possible alternatives before getting a car title loan. Of course, who really wants to disclose their temporary financial hardship to anyone but a car title loan professional? NO ONE!

Examples of car title loan alternatives include asking your employer for an advance on your next paycheck; finding out if your bank or credit union provides short-term credit products; asking creditors for more time to pay your bills; asking for a loan from a relative or friend.

Auto title loans typically are advertised as short-term loans for people who need money quickly but may not have access to more conventional loans, due to temporary financial challenges and low credit scores.

Few assets are more important to Californians’ financial security than their cars.

Borrowers who use their auto titles as loan collateral are risking that asset.

Car title lending can be VERY profitable for the lenders. APR’s exceed 100% per year.

Car title loans are an expensive solution for borrowers in financial straits.

The amount of these loans is always less than what the car is worth. Smart car title loan lenders only loan a maximum of 50% of the “low Book value” of the car.

WARNING: IN CALIFORNIA – AND MOST STATES – FOR ALMOST ALL AUTO TITLE LOANS, THE INTEREST RATE LENDERS CAN CHARGE IS UNLIMITED.

CAR TITLE LOANS ARE A LOAN PRODUCT OF LAST RESORT FOR BORROWERS.

Current California state law does not limit interest rates for consumer loans of $2,500 or more. [CFL License.] This includes car title loans.

Last year, nearly 100 percent (99.99 %) of auto title loans equaled or exceeded that $2500 threshold.

The APR (annualized interest rate) on the vast majority of car title loans was 70% to 100% plus.

Title Loan Business

Start a Title Loan Business

Title loan lenders who follow the “Best Practices” discussed in our “How to Start a Car Title Loan Business” will disclose ALL fees, interest rates, add-ons… to the borrower before the title loan is consummated. [You want to learn how to make money with a car title loan business? Click here.]

Car title loan borrowers should carefully review the terms of the loan BEFORE signing the title loan contract.

Always check with the California Department of Business Oversight on a company’s license BEFORE entering into an agreement for an auto title loan.

www.dbo.ca.gov 1-866-275-2677

 

01
Apr

Starting a Car Title Loan Business

Posted by / How to Start

Starting a title loan business in California?

You want to start a title loan business? Need the basics? What can you charge title loan borrowers in fees and interest? How do car title loans work?

How to Start Title Loan Biz

How to Start Title Loan Biz

(This piece is focused on starting an auto title loan business via the Internet or a store-front in Calififornia. As an entrepreneur contemplating a title loan business startup, know that they are legal in roughly 20 states and we have the license applications, sample contracts and documents, and access to the laws in each state.)

Inspired by a consumer advisory from the California Department of Business Oversite, this Post does a good job of providing California car title loan startup entrepreneurs with the basics about title loan, pink slip loans, auto equity loans…

What’s a car title loan?

Title loans are called many names. Here’s a few auto title loan terms used by consumers to discover a title loan lender:

  • Pink slip loans
  • Auto title loans
  • Automobile title loans
  • Car equity loans
  • Auto equity loans
  • Cash for car title loans
  • Title loans
  • Auto collateral loans
  • Whatever you want to call them…

Basically, car title loan lenders loan money to a borrower in return for the title to the borrower’s car. The borrower is allowed to keep possession of the car and continue to drive it. We charge the borrower whatever we wish for lending the borrower our money. In our California stores, we charge 60% to 120%+ for our loans. (Typically, 8% – 18% per month on the outstanding loan principal.)

If the customer fails to pay us on time AND fails to contact us AND fails to make ANY effort to work with us, we repossess their car. We have it picked up by an independent service. We have the car delivered to the auction. The car is sold at the auction. We deduct our costs, fees and interest from the monies received from the auction company. Any remaining balance is mailed to our borrower.

Title loan Advisory by California Department of Business Oversite

1st, The CDBO advises “caution before borrowing money through an automobile title loan.”

  • Title loans require you to offer your car as collateral for your loan.
  • If you miss a scheduled payment your title loan lender can reposses your vehicle.

Tips for consumers considering an auto title loan:

  • Borrow only as much money as you can afford to fully repay when the payment is due, which may be less than the amount you may be eligible to receive.
  • You have the right to full disclosure in your contract of all interest charges, the annual percentage rate (APR) of the loan and all fees. The final contract must be in the language in which you negotiated it.
  • Before you take out a loan, read the contract thoroughly and be sure you understand all the terms.
  • Once the loan agreement is signed, you are legally responsible to fulfill the obligations in the contract.
  • Be aware some lenders use remote engine shutdown devices that allow them to turn off your car if you don’t make payments. Some of these devices have GPS tracking capability.
  • Although these loans are quick and easy to obtain, you pay higher prices for the convenience.
  • ABOVE ALL, CONSIDER AVAILABLE ALTERNATIVES. Examples include asking your employer for an advance on your next paycheck; finding out if your bank or credit union provides short-term credit products; asking creditors for more time to pay your bills; asking for a loan from a relative or friend.

Auto title loans typically are advertised as short-term loans for people who need money quickly but may not have access to more conventional loans often due to poorcredit scores.

From the California Department of Business Oversight:

“Few assets are more important to Californians’ financial security than their cars. Borrowers who use their auto titles as loan collateral are risking that asset. That’s why we strongly urge
consumers to exercise great care before taking out an auto title loan, and to try other options first. The amount of these loans typically is less than what the car is worth.”

WARNING: FOR ALMOST ALL AUTO TITLE LOANS, THE INTEREST RATE LENDERS CAN CHARGE IS UNLIMITED.

THIS SHOULD BE A LOAN PRODUCT OF LAST RESORT.

“Current California CFL License holders state law does not limit interest rates for consumer loans of $2,500 or more. The annualized interest rate on the vast majority of these loans ranged from 70% to 100% and higher. Even if you don’t have the protection of interest rate limits, the law requires lenders to deal with you fairly and honestly. That means they must fully inform you about the interest you will pay.”

“Carefully review the terms of the loan BEFORE you sign a contract! Always check with the Department of Business Oversight on a company’s license BEFORE entering into an agreement for an auto title loan. www.dbo.ca.gov 1-866-275-2677.”

ATTENTION ENTREPRENEURS: You want to start a car title loan business? Start Here!

How to Start a Loan Business

HOW TO START A TITLE LOAN BUSINESS

01
Apr

Arizona Car Title Loans: CONSUMER LENDER LOANS FINTECH

Posted by / Arizona

Title loan companies are still specifically included in this new Arizona Fintech Consumer Loan law.

These lenders are the successors to payday loans, who lend small sums of money at relatively high interest rates using the customer’s vehicle as collateral.

Title loans are specifically included in this new bill.

Arizona:

ARIZONA CHAPTER 55
35 REGULATORY SANDBOX PROGRAM
36 ARTICLE 1. GENERAL PROVISIONS

IN THIS CHAPTER, UNLESS THE CONTEXT OTHERWISE REQUIRES:
“APPLICABLE AGENCY” MEANS A DEPARTMENT OR AGENCY OF THIS STATE ESTABLISHED BY LAW TO REGULATE CERTAIN TYPES OF BUSINESS ACTIVITY IN THIS STATE AND PERSONS ENGAGED IN SUCH BUSINESS, INCLUDING THE ISSUANCE OF LICENSES OR OTHER TYPES OF AUTHORIZATION, THAT THE ATTORNEY GENERAL DETERMINES WOULD REGULATE A SANDBOX PARTICIPANT IF THE PERSON WAS NOT A REGULATORY SANDBOX PARTICIPANT.

“INNOVATION” MEANS THE USE OR INCORPORATION OF NEW OR EMERGING  TECHNOLOGY OR THE REIMAGINATION OF USES FOR EXISTING TECHNOLOGY TO ADDRESS A PROBLEM, PROVIDE A BENEFIT OR OTHERWISE OFFER A PRODUCT, SERVICE, BUSINESS MODEL OR DELIVERY MECHANISM THAT IS NOT KNOWN BY THE ATTORNEY GENERAL TO HAVE A COMPARABLE WIDESPREAD OFFERING IN THIS STATE.

“INNOVATIVE FINANCIAL PRODUCT OR SERVICE” MEANS A FINANCIAL PRODUCT OR SERVICE THAT INCLUDES AN INNOVATION.

“REGULATORY SANDBOX” MEANS THE PROGRAM ESTABLISHED BY THIS CHAPTER THAT ALLOWS A PERSON TO TEMPORARILY TEST INNOVATIVE FINANCIAL PRODUCTS OR SERVICES ON A LIMITED BASIS WITHOUT OTHERWISE BEING LICENSED OR AUTHORIZED TO ACT UNDER THE LAWS OF THIS STATE.

“SANDBOX PARTICIPANT” MEANS A PERSON WHOSE APPLICATION TO PARTICIPATE IN THE REGULATORY SANDBOX IS APPROVED PURSUANT TO THIS CHAPTER.

“TEST” MEANS TO PROVIDE PRODUCTS AND SERVICES AS ALLOWED BY THIS CHAPTER.

Program purpose:

THE ATTORNEY GENERAL SHALL ESTABLISH A REGULATORY SANDBOX PROGRAM IN CONSULTATION WITH APPLICABLE AGENCIES OF THIS STATE TO ENABLE A PERSON TO  OBTAIN LIMITED ACCESS TO THE MARKET IN THIS STATE TO TEST INNOVATIVE FINANCIAL PRODUCTS OR SERVICES WITHOUT OBTAINING A LICENSE OR OTHER  AUTHORIZATION THAT OTHERWISE MIGHT BE REQUIRED.

Application process and requirements; fee
ANY PERSON MAY APPLY TO ENTER THE REGULATORY SANDBOX TO TEST AN 34 INNOVATION. THE ATTORNEY GENERAL MUST ACCEPT AND REVIEW EACH APPLICATION FOR ENTRY INTO THE REGULATORY SANDBOX ON A ROLLING BASIS.

AN APPLICATION MUST DEMONSTRATE THAT AN APPLICANT BOTH:
1. IS AN ENTITY OR INDIVIDUAL THAT IS SUBJECT TO THE JURISDICTION OF THE ATTORNEY GENERAL THROUGH INCORPORATION, RESIDENCY, PRESENCE AGREEMENT OR OTHERWISE.

2. HAS ESTABLISHED A LOCATION, WHETHER PHYSICAL OR VIRTUAL, THAT IS ADEQUATELY ACCESSIBLE TO THE ATTORNEY GENERAL, FROM WHICH TESTING WILL BE 43 DEVELOPED AND PERFORMED AND WHERE ALL REQUIRED RECORDS, DOCUMENTS AND DATA 44 WILL BE MAINTAINED.

3 PERSONS THAT ALREADY POSSESS A LICENSE OR OTHER AUTHORIZATION UNDER STATE LAWS THAT REGULATE A FINANCIAL PRODUCT OR SERVICE MUST FILE AN 3 APPLICATION WITH THE ATTORNEY GENERAL TO TEST INNOVATIVE FINANCIAL PRODUCTS OR SERVICES WITHIN THE REGULATORY SANDBOX.

FOR A SANDBOX PARTICIPANT TESTING CONSUMER LENDER LOANS AS DEFINED IN SECTION, AN INDIVIDUAL CONSUMER LENDER LOAN MAY BE  ISSUED FOR UP TO FIFTEEN THOUSAND DOLLARS, EXCEPT THAT AGGREGATE LOANS PER CONSUMER MAY NOT EXCEED FIFTY THOUSAND DOLLARS. ALL CONSUMER LENDER LOANS ISSUED IN THE REGULATORY SANDBOX, INCLUDING LOANS IN EXCESS OF TEN THOUSAND DOLLARS, ARE SUBJECT TO ALL OF THE FOLLOWING:

Arizona Fintech Legislation 2018

23
Feb

Car Title Loan Lenders Beware: Be Careful When Serving Active-Duty Service Members!

Posted by / Collections

How to Start a Car Title Loan BusinessTitle loan lenders serving active-duty service members NO-NO!

“Department of Justice (DOJ) goes after car title loan lenders and city government for their repossession by tow truck vendors for towing, selling and auctioning active service member automobiles.”

Done right, a car title loan lender can make a lot of money. Done wrong, your title loan business can put you in a heap of pain! Want to avoid the pain? Learn “How to Start a Car Title Loan Business” here: Get Started.

Even city government can screw up when dealing with active-duty service members. A specific example? On June 22, 2015, Chief Petty Officer Hartzog’s military legal assistance attorney sent a letter to Pinky Tows that outlined the facts and applicable SCRA provisions and sought restitution of $22,889.95 for the value of the 1997 Chevrolet S-10 and for the tools and personal items that were stored in the motor vehicle.

The Service members Civil Relief Act (SCRA) requires a person, a car title loan company, city governments… having a lien on a vehicle owned by an active-duty service member to obtain a court order before enforcing a lien.  The DOJ’s complaint alleges that Honolulu and their tow truck general contractor violated the SCRA by towing vehicles belonging to three active-duty service members identified in a complaint and the subsequent disposition of these vehicles without court orders.  The settlement agreement states that a DOJ investigation – launched in response to information provided by military attorneys – revealed that between 2011 and 2016, the city of Honolulu auctioned 1,440 vehicles registered to individuals who identified themselves as service members on city forms during their motor vehicle registration process.

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How to Start a Title Loan Biz

NATURE OF THE ACTION
1. This action is brought by the United States to enforce the provisions of the Service members Civil Relief Act (“SCRA”), 50 U.S.C. §§ 3901-4043, against the City and County of Honolulu, Hawaii (hereinafter “Honolulu”) and P M Autoworks, Inc. d/b/a All Island Automotive Towing (hereinafter “All Island Towing”) (collectively “the Defendants”) for illegally auctioning, selling, or otherwise disposing of the motor vehicles and personal effects of active-duty service members.

2. The purpose of the SCRA is to provide service members with protections against certain civil proceedings that could adversely affect their legal rights while they are in military
service. One of those protections is the requirement that a person holding a lien on the property or effects of an active-duty service member obtain a court order prior to enforcing the lien. The
court may stay the proceedings for a period of time or adjust the obligations to preserve the interests of all parties.

3. Neither Honolulu nor its contracted towing company, All Island Towing, determines whether the motor vehicles they auction, sell, or otherwise dispose of are owned by active-duty service members.

4. By failing to obtain court orders before auctioning, selling, or otherwise disposing of the motor vehicles and personal effects of protected service members, the Defendants prevented service members from obtaining a court’s review of whether the lien sales should be delayed or adjusted to account for their military service.

5. Since January 1, 2011, the Defendants have auctioned, sold, or otherwise disposed of the motor vehicles of 1,440 individuals who had identified themselves as active-duty service members during the motor vehicle registration process. The Defendants auctioned, sold, or otherwise disposed of these vehicles to satisfy liens without obtaining court orders.

6. Prior to January 1, 2011, Honolulu and/or its contracted and subcontracted towing companies auctioned, sold, or otherwise disposed of the motor vehicles of other active-duty service members to satisfy liens without obtaining court orders.

Here’s the details on one of the 3 cases – the DOJ filed on. Chief Petty Officer Hartzog and his 1997 Chevrolet S-10.

Neither Honolulu nor its current contracted towing company, All Island Towing, determines whether the motor vehicles they auction, sell, or otherwise dispose of are owned by active-duty service members.

Honolulu’s Lien Sale of CPO Hartzog’s 1997 Chevrolet S-10

At all times relevant to this complaint, CPO Hartzog’s motor vehicle was registered in Hawaii. During the motor vehicle registration process, CPO Hartzog completed a non-resident driver form which identified him as a servicemember and exempted him from paying certain state and county motor vehicle weight taxes on that basis.

30. In October 2014, CPO Hartzog was aboard a U.S. Navy ship being transported to his temporary duty station in East Asia. Without his permission, his roommate drove his 1997 Chevrolet S-10 and was subsequently arrested. The motor vehicle was towed by Pinky Tows, a subcontractor of All Island Towing.

31. In early November 2014, CPO Hartzog learned via Facebook that his truck had been towed. On November 5, 2014, he executed a power of attorney onboard the naval ship, designating a fellow chief petty officer as his agent. On the same date, he scanned and emailed the executed power of attorney to his agent in Honolulu.

32. On or about November 11, 2014, the agent took the document to Pinky Tows in an attempt to retrieve CPO Hartzog’s motor vehicle and his personal effects. Pinky Tows refused to accept the power of attorney or release the motor vehicle. Pinky Tows refused to allow the agent to remove valuable tools and personal items from the trunk of the motor vehicle because the agent was not the motor vehicle’s legal owner.

On December 3, 2014, Honolulu attempted to auction the motor vehicle and its contents, but they did not sell. Honolulu released the motor vehicle to All Island Towing, and All Island Towing subsequently disposed of the motor vehicle and its contents. Neither Honolulu nor All Island Towing obtained a court order prior to putting CPO Hartzog’s motor vehicle up for auction or before disposing of the motor vehicle.

34. On February 5, 2015, CPO Hartzog returned from deployment.

35. On June 22, 2015, CPO Hartzog’s military legal assistance attorney sent a letter to Pinky Tows that outlined the facts and applicable SCRA provisions and sought restitution of $22,889.95 for the value of the 1997 Chevrolet S-10 and for the tools and personal items that were stored in the motor vehicle.

36. Pinky Tows responded by letter on July 16, 2015, stating that it had only towed and stored CPO Hartzog’s truck, and that the truck was put up for auction by Honolulu and was scrapped by All Island Towing.

37. On August 12, 2015, the military legal assistance attorney sent a similar demand letter to Honolulu. Honolulu did not respond.

38. The Department of Defense’s Defense Manpower Data Center (“DMDC”) website shows that CPO Hartzog was an active-duty service member when his motor vehicle was towed, put up for auction, and subsequently scrapped. The DMDC is the central source for identifying, authenticating, and providing information on Department of Defense personnel, including verifying  service members’ active duty status.

Here’s a link to the rest of this Case: https://www.justice.gov/

Learn the in’s and out’s of successfully launching, operating and profiting with a Car Title Loan Business: CLICK HERE TO GET STARTED!

How to Start a Loan Business

HOW TO START A TITLE LOAN BUSINESS

Jer Ayles

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