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Starting a car title loan business can be a great way to make money and be of service. By ensuring you have everything in place and are prepared for the challenges of owning such a small business, you’ll be able to get off on the right foot and make sure your new venture succeeds!
You can start learning about the industry by reading books, magazines, and articles on car title loans. Most importantly, GET A CAR TITLE LOAN! Also, talk to people in the industry, especially existing car title lenders. Even if you’re planning an online auto title loan business, if possible, visit stores offering title loans, Take photos of the various state disclosures, licenses, and fee breakdowns typically posted in every car title loan storefront location. You can find this info on websites as well. [And, of course, https://thebusinessoflending.com/297-00/, in our 500+ page PDF Manual.]
To learn more about your competition, you should look at their websites and see how they market themselves. You can also get information from Google Adwords or Bing Ads that will provide you with data about keywords related to your business. You can use this information for keyword research to optimize your website and make sure that it ranks well on search engine result pages (SERPs).
You should also educate yourself about your customers so that you know what their needs are going into the business. This will help ensure you can fulfill these needs when providing services such as funding car title loans and other related products or services like title transfers.
Before you start your car title loan business, it’s important to set goals. You can’t know whether or not you are achieving your business goals unless you have a clear idea. In the title loan industry, we refer to these as KPIs. [Key Performance Indicators]
There are two things wrong with setting goals before starting a car title loan business:
There are several different laws that, if not followed, could result in serious penalties. For example, when it comes to how much money you can charge or how quickly your borrower must pay back your loan, each state has its own specific rules. It’s important to know these laws and whether they apply to your business, and how they would affect its operations.
Make sure you fully understand the regulations regarding licensing requirements for title loan businesses in your area and state before starting one yourself. There are rarely zero laws where you operate! That’s true for online and storefront auto title loan businesses. Research what other states have done regarding title loan legislation and mimic something similar for yourself (i.e., don’t just copy from another state’s code). If licensing requirements exist but aren’t enforced, then contact officials so they can start enforcing them! After all, YOU paid for your state license, bond…
For example, Texas requires title loan lenders to act as Credit Access Businesses – CABs. It’s crazy, but lenders cannot loan their own money! They must collaborate with a “3rd Party Lender.” [PS: Our Manual, “How to Loan Money to the Masses,” covers this thoroughly!] Know too that some Texas cities have passed city ordinances. You can’t legally offer car title loans in these cities. Solution? Offer car title loans online or set up your storefront in the county. [Again, our Manual covers how to operate in Texas & every other state in which this loan product is legal. ] Conversely, California passed a <36% APR cap on title loans! Every state is different. [If this were easy, everyone would do it 🙂 ]
As you begin your car title loan business, it’s important to develop a comprehensive plan. A well-thought-out plan will help you avoid mistakes and ensure that you are on the right path toward success.
Here are the critical components of your plan:
The online car title loan model is kicking butt today. Tremendous new tech platforms and GPS devices are revolutionizing our industry. Instant bank verification, same-day funding, AI-powered collection tools, loan management software, and income validation platforms… make lending money online enticing and easier than ever before.
Choosing a physical location for your car title loan business is one of the most important decisions you can make. You want to ensure that your location is accessible to customers and near a busy street or large parking lot. You also want to choose a safe area where there’s not much crime and an area in which many people live, work, and drive around.
The best locations are those with large populations. They have plenty of potential customers who need money fast because they are short on cash after paying their monthly bills, need car repairs, gas to get to work, rent…
Before you begin the process of opening your own car title loan business, it’s important to create a budget. This will help you determine how much money you need to invest in your business and how much profit you can expect. To create a good budget for your car title loan business:
Marketing is a key component of running a successful title loan business, but it’s often overlooked. Instead, businesses believe that once they have the product or service ready, all they need to do is advertise, and customers will come. That might be true for some businesses—but for others, like car title loans where people are putting up their cars as collateral and can’t afford any payment defaults or late payments, there needs to be more than just advertising. You also need to build trust with your clients so that when you tell them about your plan to help them get out from under their financial burden and pay back the loan, they believe in what you’re saying and follow through on it.
There are many ways that marketing can be done—from advertising on radio stations with commercials at the beginning of each hour (or whatever time interval) promoting your business; having billboards placed strategically throughout town; posting flyers at local grocery stores and libraries; sending direct mailings via snail mail and emailing, customer referral rewards… There are countless ways to market depending on what business model fits best into yours (i.e., traditional brick-and-mortar store vs. online eCommerce).
To run a successful car title loan business, you must know all its workings. You need to know the laws and regulations that apply to your business. You should know how to develop a plan for starting up and running your car title loan business. You also need to have knowledge of the latest technology for car title loan lenders and acquire car title loan customers by using social media marketing techniques like GMB [Google My Business], Facebook ads, and Google Adwords. [NOTE: several social media platforms do not allow subprime lending ads for loan products that exceed 36% caps! Workarounds exist, and we discuss them in our 500+ page Manual, “How to Start & Improve a Consumer Loan Business.] You must understand how things work so that you can underwrite car title loans effectively with minimal risk of your time and capital.
PS: We have a LONG LIST of resources focused on “lending to the masses” here: Resources
Don’t be afraid to ask questions, and don’t be shy about taking advice from others. You may have a lot of business knowledge already, but remember that there are always new things to learn—and other people who can teach you. Don’t let your pride stand in the way of this opportunity for growth!
Finally, INVEST IN YOURSELF! And always be learning!
Jer Ayles: TrihouseConsulting@gmail.com The Business of Lending to the Masses
Please return the completed application and related fees to the address list below:
Consumer Credit Section
100 W. Randolph St. Suite 9-100
Chicago, IL 60601
Office Use Only
Log No.___________ Check #___________ Fee Slip__________ |
STATE OF ILLINOIS
DEPARTMENT OF FINANCIAL & PROFESSIONAL REGULATION
DIVISION OF FINANCIAL INSTITUTIONS
APPLICATION FOR PAYDAY LENDER LICENSE
PAYDAY LOAN REFORM ACT
Application is hereby made to the Director of Financial Institutions for a license to
engage in the business under the provisions of the Illinois Payday Loan Reform Act.
(Address)
(City) (County) (State) (Zip Code)
(City) (State) (Zip Code)
Telephone # Fax #
Contact Person Federal Employer I.D. #
Other____________________________________________________________________
IF Yes, provide a list of the States.
If Yes, provide full details on a separate sheet.
If Yes, provide full details on a separate sheet.
If the entity is a foreign corporation, the date, and number of Charter in Illinois:
_________________
Date Number
Page 1 of 2
14.______ The Proposed site is not within one mile of a horse race track subject to the Illinois Horse Racing Act of 1975, within one mile of a facility at which gambling is conducted under the Riverboat Gambling Act, within one mile of the location at which a riverboat subject to the Riverboat Gambling Act docks, or within one mile of any State of Illinois or the United States military base or naval installation.
OR
______ The location was already in existence as a payday loan business as of June 1, 2005.
Financial and Professional Regulation? ____________
If YES, please list type of license and license number:
under penalties of perjury, I declare that I have examined the application and all supporting documents submitted by me in connection therewith, and to the best of my knowledge, they are true, correct, and complete.
__________________
(Signature of Applicant) Date________
STATE OF ILLINOIS
DEPARTMENT OF FINANCIAL & PROFESSIONAL REGULATION
DIVISION OF FINANCIAL INSTITUTIONS
SUPPLEMENTAL APPLICATION PAYDAY LENDER LICENSE
All answers must be TYPED or legibly PRINTED. All questions must be answered.
(First) (Middle) (Last)
Order: (A copy of a resume for the same period of time may be substituted
to satisfy this requirement.)
Years______________________________________________________________________________
From To Company Name:_________________________________________________________
Company Address:______________________________________________________________________
Position Held:________________________________________________________________________
Principal Duties:_____________________________________________________________________
Years______________________________________________________________________________
From To Company Name:_________________________________________________________
Company Address:______________________________________________________________________
Position Held:________________________________________________________________________
Principal Duties:_____________________________________________________________________
Years______________________________________________________________________________
From To Company Name:_________________________________________________________
Company Address:______________________________________________________________________
Position Held:________________________________________________________________________
Principal Duties:_____________________________________________________________________
Yes No_____
If yes, provide on a separate sheet full details, including a summary, the
the court, the presiding judge(s), and the title and document number.
Yes No_____
If yes, provide on a separate sheet full details, including a summary, the
court, presiding judge(s) and the title and document number.
Under penalties of perjury, I declare that I have examined the application and all supporting documents submitted by me in connection therwith, and to the best of my knowledge they are true, correct and complete.
__________________
(Signature of Applicant) Date
Page 2 of 2
STATE OF ILLINOIS
DEPARTMENT OF Financial & PROFESSIONAL REGULATION
DIVISION OF FINANCIAL INSTITUTIONS
LICENSEE BOND
Payday Loan Reform Act
KNOW ALL MEN BY THESE PRESENTS, That_____________________________________________________________
Corporate or Company Name
___________________________________________________________________________________
Street Address City/State
and,________________________________________________________________________________
as surety, are held and firmly bound unto the Division of Financial Institutions, for the use of the State and of any person or persons who may have a cause of action against the obligors of this instrument, under the provisions of the Act hereinafter described, in the penal sum of for the period from this date_________________________ to December 31, ________, for the payment of which, well and truly to be made, we bind ourselves, our heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents.
Witness our hands and seals this day of , A.D.______
The condition of the above obligation is such that the above
___________________________________________________________________________________
Corporate or Company Name has applied for a license for the term ending December 31, 20____, to transact the business of making loans in accordance with the provisions of the Illinois Payday Loan Reform Act.
Now, if the said______________________________________________________________________
Corporate or Company Name
shall, upon issuance of said license as aforesaid, faithfully conform to and abide by each and every provision of said Act and of all rules, regulations and directions lawfully made by the Director of Financial Institutions, and will pay to the State and to any person or persons from said obligors, under and by virtue of the provisions of said Act, then this obligation to be void, otherwise to remain in full force and effect.
___________________________________
Corporate or Company Name
By_________________________________
President, Owner or Partner
By_________________________________
Secretary, Owner or Partner
__________________________________
Surety or Bonding Company
By_________________________________
Illinois Attorney-in-Fact
(Attach Power of Attorney)
State of Illinois
Department of Financial & PROFESSIONAL REGULATION
DIVISION OF FINANCIAL INSTITUTIONS appointment of attorney-in-fact for service of process know all men by these presents:
that_____________________________________________________________________________________________
Corporate or Company Name
_________________________________________________________________________________________________
Street City
____ does hereby appoint the
County State
incumbent Director of the Division of Financial Institutions of the State of Illinois and his/her successors in office, or any official who shall hereafter be charged with the administration of the Payday Loan Reform Act, its attorney-in-fact upon whom all processes of law against it arising out of any transaction under the Payday Loan Reform Act may be served. The appointment of the Director of Financial Institutions as attorney-in-fact is conditional upon the issuing of a license to conduct a business of making loans under the Payday Loan Reform Act and in the event that a license is not granted, this appointment shall remain in full force and effect and may not be revoked except by consent of the Director of Financial Institutions. In the event that the license of said applicant is revoked, surrendered or otherwise terminated, the appointment of the Director of Financial Institutions as attorney-in-fact to accept service of process shall continue until such time as all matters arising out of the conduct of said licensee’s business in this state shall have been concluded.
IN WITNESS WHEREOF, the applicant has set his hand and seal in the City of State of ,
On 20
(CORPORATE SEAL) By__________________________________
(President, Owner, Partner)
By__________________________________
(President, Owner, Partner)
CORP. FILE NUMBER
IF OUT OF STATE
Subscribed and sworn to before me this day of 20_____
Notary Public My Commission Expires_______________________
NOTARY SEAL
INFORMATION FORM
of the Licensed Entity.
(Name) (Title) (Percent of Stock)
_________________________________________________________________________
(Address) (City) (State) (Zip Code)
(Name) (Title) (Percent of Stock)
_________________________________________________________________________
(Address) (City) (State) (Zip Code)
(Name) (Title) (Percent of Stock)
_________________________________________________________________________
(Address) (City) (State) (Zip Code)
(If more space is required attach a separate sheet)
the Licensed Entity.
(Name) (Title) (Percent of Stock)
_________________________________________________________________________
(Address) (City) (State) (Zip Code)
(Name) (Title) (Percent of Stock)
_________________________________________________________________________
(Address) (City) (State) (Zip Code)
(Name) (Title) (Percent of Stock)
_________________________________________________________________________
(Address) (City) (State) (Zip Code)
(If more space is required attach a separate sheet)
III. Name, Percent of Ownership and Resident Address of Each Stockholder Owning
10% or More of Capital Stock or Any Owner/Partner of the Licensed Entity who
is Not Listed Above.
(Name) (Percent of Stock/Ownership)
_________________________________________________________________________
(Address) (City) (State) (Zip Code)
(Name) (Percent of Stock/Ownership)
_________________________________________________________________________
(Address) (City) (State) (Zip Code)
(Name) (Percent of Stock/Ownership)
_________________________________________________________________________
(Address) (City) (State) (Zip Code)
(If more space is required attach a separate sheet)
The Percentage of Ownership from Section I, II and III Must Total 100%
Customer acquisition cost, or CAC, is the amount of money spent on sales and marketing required to fund a new customer’s loan. It is calculated by summing a consumer lender’s total sales, and marketing spend and dividing it by the number of new customers acquired.
Lenders can calculate CAC for a given time period or all time and is helpful to compare the effectiveness of different marketing tactics and strategies.
Of course, a lower CAC is better, as it suggests your marketing and sales teams are effective at targeting your customer avatar efficiently.
The purpose of customer acquisition is to find a repeatable, methodical way of attracting customers to your lending business. Your goal is to increase your “book; your portfolio. Consumers by the millions are applying for small-dollar loans daily. You’ve got to get more than your share! You cannot wait for borrowers to naturally come to you.
Your goal is to create an efficient, systematic, ongoing strategy to acquire new borrowers, service existing borrowers, and grow your “money on the street” in order to scale loan fees generated.
Here it is! Our newly updated 500+ page Manual. We thoroughly explain step-by-step how to start & operate a profitable consumer loan business.
The Course: “How To Start/Improve a Consumer Loan Business.”
If you’re worn out spending hour upon hour searching Google for consumer loan business strategies, know-how, software, licensing, consumer credit reporting, sample contracts, collection tactics, profitability, how much start-up capital you need, anticipated default metrics, and on and on and on… Our “Bible” delivers ALL THESE ANSWERS AND MORE! Answers to how profitable are they? How much do these businesses earn? Do you need a license? We update our “Bible” every 3 months.
A new Bank Rate study is out! [Link below.]
“As the job market cools down and inflation heats up, a new survey from Bankrate indicates that side hustles are a necessity for a growing number of Americans. Former top motivations for side hustling, like paying off debt and saving, have given way to a more pressing need: making ends meet.”
“Unfortunately, due to high inflation and other financial burdens, more side hustlers are working a side job just to make ends meet,” said Ted Rossman, Senior Industry Analyst for Bankrate. “Instead of using this income to boost savings, knock out debt or pay for a vacation, there has been a big increase in people who simply need these funds just to pay for everyday living expenses.”
“41% of U.S. adults who have a side job in 2022 need the extra income to pay for everyday living expenses as compared to 31%in 2019 (the last year of polling), according to a new survey from Bankrate.com.Fewer are putting this money towards savings(17% vs. 24%in 2019) and using it for discretionary spending (26% vs. 36%in 2019).”
Bottom Line? The near-prime will soon be the subprime. Demand for loans is trending up and will continue to scale rapidly. Opportunities abound for Lenders!
ARE YOU EMPLOYING THE BEST-OF-BREED CUSTOMER ACQUISITION, UNDERWRITING, FUNDING… RESOURCES & PLATFORMS RAPIDLY ENTERING OUR INDUSTRY TODAY? DON’T KNOW WHERE TO BEGIN? LOOK NO FURTHER! YOUR ANSWERS ARE HERE: LENDER RESOURCES
Thanks for being a loyal email subscriber. I appreciate hearing from you. Let me know if you ever have any questions. And, you can click on the image to schedule a call!
WANTED: Portfolio/Platform Acquisition: We continue to aggressively pursue $10MM+ collateralized loan [vehicle title] portfolios! Reward! Email Jer TrihouseConsulting@gmail.com
The Future of the Small-Dollar Micro-Lending Industry
We define small-dollar micro-lending products as relatively small loan principals of $50 to $5000 for seven days to 48 months having APRs of 30% to 1500% or more. These products include payday loans, car title loans, installment loans, line-of-credit loans, pawn, rent-to-own and similar products not yet envisioned.
Sub-prime, small-dollar micro-lending products are a normal market response to demand for short-term liquidity from borrowers with jobs but little access to other sources of funds. These financially challenged consumers lack access to credit cards, banks, and credit union funding. Their friends and family cannot help because it’s not only embarrassing to ask, but their peers are in similar circumstances.
Lenders must create a business model that:
The business of lending to the masses.
Demand for subprime, micro-lending loan products continues unabated. As the middle class expands and high FICO (U.S.) consumers debase and decline into lower credit tranches, the demographic for subprime loan products will continue to scale! Study after study consistently concludes that consumers need access to quick, no-hassle, small-dollar loans to meet temporary financial emergencies.
Today’s inflationary environment drives demand for small-dollar loans as well.
Defaults: Price increases this year!
gas: +49%
used cars: +35%
hotel room: +29%
airline tickets: +24%
car rentals: +23%
bacon: +18%
oranges: +18%
furniture: +17%
peanut butter: +16%
crackers: +16%
steak: +16%
suits: +15%
butter: +14%
milk: +13%
lamps: +12%
coffee: +11%
cereal: +10%
My point? Defaults will soon prove to be an issue for lenders. Lenders need tools that provide instant, real-time financial data about their borrowers and applicants. Reach out immediately if you do not have access to the following instant alerts via your loan management platform:
Why does this matter? Inflation is rising dramatically. Defaults will soar. Demand for loan products is scaling. He who can qualify, approve and fund a loan fast will win BIG in this new environment. The tool is here today. To learn more: TrihouseConsulting@gmail.com
The Internet and mobile technology continue to impact the small-dollar micro-lending industry profoundly. Consumers residing in states and provinces that do not allow payday loan products to exist routinely obtain them online. Imagine a web that isn’t focused around a computer but is everywhere, on every device, every person, accessible at every location. It’s not a place you go; it’s a layer behind everything you do.
The phone! Enough said! That’s where the action is. EVERYONE does business on their phone today!
Email is less and less likely to be opened by your customer on their desktop or laptop computers. Email “opens” in mobile devices now dominate. This is huge. Micro-lenders who are slow to adapt to this revolutionary reality will experience reductions in loan portfolio size and fail to achieve velocity.
Regulation will continue to dominate the small-dollar micro-lending landscape for the foreseeable future. In every country small-dollar micro-lending products enter the fray, they meet resistance from competitors, including banks and credit unions, so-called consumer protectionists, credit card companies, legislators, and competing Fintech platforms. Many licensing models, including choice-of-law, sovereign nation (tribe), offshore, state-by-state, and province-by-province, continue to “muddy the waters.”
On a local level, more than a few cities, townships, and counties are capping or restricting the number of payday loan financial service centers allowed. Brick-n-mortar operators must continually meet with and educate local politicians and city council members regarding their business and customers. Remind these politicians that our industry pays taxes, employs thousands of their constituents, contributes to the community, and pays leases and property taxes.
Regarding the CFPB (U.S), we have personally met with the head of the CFPB and various Asst. Directors of the CFPB. Our takeaway is that they are focused on transparency and disclosure of all fees rather than some Machiavellian legislative initiative.
International entry into small-dollar micro-lending continues. Payday loans, installment loans, car title loans, line=of-credit loans, etc., are offered in the U.S., Canada, the U.K., Australia, Poland, Latvia, Mexico, Latin America, South Africa, and more. Interestingly, companies with international small-dollar micro-lending success are entering the U.S. despite the perceived regulatory climate.
Payment Processing may be the most dynamic area today for the small-dollar loan industry today. Crypto and the lightning network are already upending our sector. Signup for our free monthly Newsletter for breaking news about vendors offering state-of-the-art platforms that eliminate chargebacks, ACH fees, and deliver instant funding for pennies.
Bottom line: This is the time to be a lender to the masses. Opportunity is the word of the day. For those of us willing and able to envision what new loan products and delivery systems should look like, the “world is our oyster.”