How to Start a highly profitable Auto Title Lending business.
A step by step guide to help you succeed in an exciting, and profitable car title loan business. A personal loan business you can easily start with a small amount of capital and zero employees.
Created by: Miro Posavec
Auto Title Lending Defined:
The Sub-prime (credit score less than 600) consumer has few options to obtain credit. Because this consumer has high levels of default, the options that ARE available to them need to be EXPENSIVE.
By expensive, we’re talking about 12-30% interest charged per MONTH. As an Auto Title business owner, you should be able to make between 8-22% per MONTH on your money. I’ve worked with operations that started with $50,000.00 and by the end of the year, they were bringing in $14,000 per month in fees.
Here’s how it works in the practical terms:
A customer walks into a store (or visits a website). They PLEDGE the title of their car (free of any/all liens etc) as security for a loan. The AutoTitle company has a contract that the customer signs, and they hold the Title of the car until the loan is satisfied. IF the customer fails to PAY, the car gets repossessed, and sold (usually at auction). The proceeds of the sale satisfy the debt (plus fees, expenses etc), and the customer receives any surplus from the sale (providing there is a surplus).
It’s very simple.
Why would a consumer do this loan? Because it’s fast, easy, and often they have few options to obtain a big chunk of $$$ on short notice.
There is significant opportunity in providing lending to this demographic. The most common loan options for this market are:
Payday Loans are an option, but are also very expensive, and don’t usually provide a bigger loan (secured with only a signed contract and an authorization to withdraw from a bank account).
Pawn: Taking a valuable item into a pawn shop and obtaining a loan against that item.
Depending on the State, AUTO pawn is the only option. The biggest challenge to the consumer if using the AutoPawn service is the loss of possession/use of the vehicle during the loan duration.
Title loans work for anything valuable that has a title. It can also be a boat, RV, trailer, or motorcycle. Although a car is the most common choice. As an operator, you want to take great care in lending on a recreational asset. The values are sometimes subjective, and not everybody needs/wants an RV or boat.
As a loan operator, placing a lien on the customers’ car has real value.
1: You can offer BIGGER loans than you could with a Payday Loan product. This allows you to do MORE loan business, while dealing with far fewer customers. The average AutoTitle loan is $1200. The Average Payday Loan is $300.00. In some areas, AutoTitle transactions can be as high as $50,000 for a very high value car.
2: Lower levels of defaults. If the customer fails to pay a Payday loan provider it doesn’t really change their life in any way. However, if you don’t pay the AutoTitle loan guy, you’re WALKING.
3: The car has VALUE. The car is usually the most valuable asset the customer has.
4: The car is easily sold. Providing you’ve used sound judgment in your portfolios, a late model car in decent condition is a commodity. It can be easily converted into cash by going to auction, or even a craigslist posting. Not quite as liquid as GOLD, but more liquid than a rare stamp, or other esoteric collectable item.
Advanced PDL Course
That’s what this course is about:
HOW to setup, and operate an AutoTitle Loan business. Either as a stand alone service, or as an addition to an existing operation.
Bottom Line: AutoTitle Lending is an excellent HEDGE operation if you’re already in Payday. It makes sense for a small operator, or a HUGE firm.
The scope of this course:
We’re going to focus on how to create, implement and successfully run an AutoTitle lending operation. If you’re already operating, we hope to show you some new opportunities and ways to safeguard your business.
We’re including everything you need to get started. Sample Contracts, forms, checklists, and many resources to get MORE information. This is a turnkey package. You’re going to get the benefit of a FRANCHISE without paying the fees. But if you want to pay us a percentage? That’s awesome too.
We’re providing a framework based on our experience in dozens of operations. Large and small. From pure storefronts, to ONline only lenders. We’ve done startups, and transitions from storefront. We’ve worked with companies that processes 1000+ leads per day. (that’s a LOT).
This is a proven blueprint, and we’re providing specific information on how to get started, and if you’re already going, strategies to keep you from losing buckets of money.
You will find checklists and resources to get you going. As well as contacts with different vendors that are proven in the industry.
The objective here is to get you started. Gently. To make intelligent choices in regards to setup, and help you avoid the many opportunities there are to lose your entire pool of capital. If you’re looking to make a large entry into the market, at least with this resource you can ask the right questions.
Within this course, I’m going to caution you over and over about how quickly you can lose an obscene amount of money. If you get careless it will cost you.
If you’re new to the industry, you’re going to have to change your thinking. First, your asset is not your receivables. This is completely against conventional banking and finance. You are in the business of collecting fees. The On-the-street numbers, while certainly important are not as important as the number and quality of your steady customers.
If you’re already a storefront operator. You have an advantage, as you are probably already licensed in your state. You have a familiarity with this business. You can leverage your existing client base, and move into online lending on a step by step basis. However, the ONLINE world is very different. You will be trying to collect money from people that you’ve never seen or met. The BAD debt rates will shock and AWE you. You will run home like a little girl crying to your mama. MOST store owners that have wandered online have run been CRUSHED. Be smart. Get prepared.
After that inspirational pep-talk? Let’s get started!!
Table of contents:
1: Auto Title Lending defined:
2: The scope of this course.
3: Compare online vs storefront, and outline Auto title lending models
4: Your job description as Owner/Director.
5: The power and profit of being professional.
6: The location.
7: Store opening Checklist
8: Online presence
9: Physical location appearance
10: What is TLO?
11: How to record everything on video and audio.
12: How to setup and use the tools of Google.
13: How to shoot, upload and display a video.
14: The magical powers of ACH.
15: Loan Management Software.
16: Looking into the bank account.
17: The four laws of Auto title loans.
19: Procedures for Giving an AutoTitle Loan:
20: Car inspection checklist
21: How to inspect cars if you’re on the internet.
22: Starting script to answer phones, and in person.
23: Installment Loan.
24: Disclose everything. Especially your rates.
26: Income Tax Prep service.
28: How do you repo?
29: Do you Repo?
30: Online lending definitions.
31: Understanding Lead providers.
32: How deals flow in an online system.
33: What about online loan operators:
34: How to find talent.
35: Should you have store managers?
36: A quiet store becomes solitary confinement.
37: Employee supervision, training, and motivation.
38: CSR Job description.
39: Stop getting in the way.
40: How to do a mailing, and why 6 is the most important number.
41: Facts about marketing methods and tools.
43: Client Survey sample.
44: Questions that I would ask you, if you hired me to consult on your business.
45: Know your customer and know your numbers.
46: 17 Marketing ideas to get your numbers on the street up right now!
47: Notes on Web design
47: Sample of letter to send asking for referrals from customers.
48: Samples of contracts and forms.
49: State by State quick summary of laws/ regulations.
Advanced PDL Course