How to Start a Texas Car Title Loan Business
You want to learn how to start a car title loan business? Read on…
According to The Texas Star Telegram, the typical Texas household is $40,000 in debt. They don’t make it clear whether this includes all Texas home loan mortgage debt; stupid.
The one thing that is clear is that Texas car title loan borrowers paid $360,000,000 in car title loan fees and interest last year. [Note: That’s an increase of $52,000,000 from the previous year. Car title loan lending is good!] This information was disclosed by the OCCC; the Texas regulatory agency for car title loan and payday loan stores and internet lenders.
Why would Texans spend this kind of money on car title loans? Because there is no where else to turn to in times of financial duress. Many Texans, like residents of California, Georgia, Arizona, Louisiana… would rather borrow from a car title loan lender for a few months than beg for help from their employer, family or friends. Why?
- Car title loans are quick and easy
- To qualify, you need to prove you can pay back the money and you have a car, RV, motorcycle… with a clear title. That means, no lien holder.
- That’s right! Cars, RV’s, motorcycles, boats… all possible collateral for a title loan
- Car title loan transactions are private
Title Loan Business
Critics of car title loan lenders are everywhere. Of course, they rarely experience “hard times” since the majority of these folks work for the government or a so-called consumer protection agency. A great example of this is the Consumers for Irresponsible Lending. [Just kidding; it’s the CRL.]
On the other hand, many consumers for car title loans work for the U.S. Post Office, the Department of Motor Vehicles, local hospitals, etc.
And of course, we have our “outlier’s.” Those consumers and lenders who push everything to the limit and place all financial service products to the point of over-regulaion! Not a day goes by that you don’t read some horror story about a poor, mistreated borrower whose car is repossessed or a car title lender who simply goes over the line of human decency because of greed.
As operators and consultants in the car title loan industry, we can report that the actual number of vehicles we repossessed are less than 3 in 100 funded title loans. In those few circumstances, we called, sent several text messages and letters to the borrowers in an attempt to get them to talk to us. Failing these measures, we simply picked up the phone, called our friendly repossessor and reported the vehicle plate and vehicle identification number to them. Within the week, the license plate scanner [LPS] company got a “hit” and our repossessor picked up the car having the title loan in a Wal-Mart parking lot.
Our car title loan repossessor delivered the vehicle to the Anaheim, Calif Manheim auto auction. There, the vehicle was reconditioned and “run” through the car auction. A week later we received our check from the auction house. We deducted the fees, interest, late charges and storage costs from the amount we received from the auction and sent the balance to our car title loan borrower’s last known address. [Note: This check was cashed :-)]
Car title loan lenders DO NOT WANT YOUR CAR! We just want our money. The fees are clearly explained AND posted on our websites and in the case of store-fronts, on the interior walls of the store.
Here’s an example of the fees we charge for a car title loan:
- Vehicle “low book value” is $8000.
- Borrower wanted $3000 for 30 days.
- We charged her $180 in fees plus a $35 DMV fee.
- That’s it!
- Yeah, sure. Extrapolated over 365 days that’s 180%+ APR. So… if the borrower doesn’t like it, no one is forcing her to borrow the cash. Try your local bank. It would cost them $500+ just to do the paper work AND they will not offer these types of loans.
Is this loan predatory? We don’t think so. But it’s a bit like pornography. I can’t tell you for sure but I know it when I see it. In Texas, California, Georgia, Arizona… it’s legal. And for MANY Texan’s, this car title loan appears to be reasonable.
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Basically, car title loan borrowers repayment schedules breakdown like this:
