Title_Loans: Profits and ROI for Entrepreneurs
Published: Sun, 08/13/17
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Title Loans: Profits and ROI for Entrepreneurs
PROFITS & ROI FOR A CAR TITLE LOAN BUSINESS - AN ENTREPRENEUR’S PERSPECTIVE.
Let’s begin with a real transaction.
I have equity in California stores amongst other states. I offer payday loans, car title lending, scrap gold buying and tax services.
In one of my locations, a new customer walked-in requesting a title loan on his truck. I determined the “low-book” value of his collateral was $15,000. I loaned $3000 at 9% per month ($270/month) for 36 months with zero pre-payment penalty. If this customer chooses to, he’ll pay me a total of $9720 in fees AND will still owe me $3000 in principal.
My point? You really don’t need to read any further to grasp the profit potential of a car title loan company.
You can read any daily newspaper and stories like the following will appear:
"Burdened by medical expenses, Amy Poormom applied for and received a $500 auto title loan secured by her 1995 Ford Taurus. This was a loan for 30 days and specified a loan fee of $30 per $100 borrowed. Amy renewed (paid only the interest/fee of $150) for 12 months. At this point Amy had paid a total of $1800 in interest/fees while still owing a balance of $500."
Of course, the “mean” auto title loan company repossessed Amy’s car(which she needed for work) and sold it for $750 at an auction. Now Amy can no longer get to work. Amy lost her job. Worry and stress put her in the hospital. Now, the hospital is suing her for non-payment; she has no job so she has no insurance.
What is not mentioned or even considered is that Amy Poormom needed the initial car title loan because no one in her family was willing to provide her with the $500 she needed for tires and brakes on her car. The auto title loan company actually enabled her to gain another 12 months to get her life back on track. It could be said that had the auto title loan company not come to her aid and provided some hope for Amy, the ultimate outcome would have come earlier. Perhaps the family should have performed an intervention to help her with her crack habit.
Ok, if you’re reading this you may think we are getting carried away. But these are real-life events.
ENOUGH OF THIS!
Back to profits.
States and provinces having specific auto title loan statutes and fee structures typically prescribe 3% – 30% per month on the principal loaned; 25% being the average in the USA. Thus, a $1500 loan for a 30 day title loan could yield total interest payments of $45 to $375 with no portion applied to the principal. Thus, if after 6 months, the title loan consumer continues to “roll-over” this title loan they will have paid as much as $2250 in...
READ THE REST OF MY ROI ANALYSIS HERE:
http://www.automobilepawn.com/title-loans-profits-and-roi-for-entrepreneurs/
Questions? Help? Comments?
TrihouseConsulting@Gmail.com
Jer@TrihouseConsulting.com