Most people view their car as a tool that they can use to get a loan whenever they find themselves in a financial bind. To get a loan, the vehicle owner will surrender the car and car title to a business in return for the loan.
There are various reasons why going into car title loan business is attractive:
- It is a quick and easy business to run. You don’t need many employees. There’s also little background checks and paper work involved.
- It has attractive interest rates.
- You’ll never run out of customers because there are many people who cannot get a loan from the bank.
- It is low risk. In case of default, you can recover your money by selling the car.
You can become a car title loan lender in the following steps:
#1 Get a business license
As with all businesses, you cannot operate without a valid business license.
You may be required to fulfill certain conditions such as undergoing an evaluation to prove that you have knowledge in the area of the business. You will be charged a fee for the license/licenses.
#2 Register your business as a limited liability company
Register your business name at the local government offices. You will be required to fill in forms and pay some fees.
It is important to set up your business as a limited liability company. If you register your company as a sole proprietorship, you could get directly sued in case of a dispute involving your business.
Incorporating or setting up a limited liability company makes your business a separate entity. Therefore, in case of a lawsuit against your business, your property will be safe.
#3 Find business premises
Select a location that has a lot of human traffic such as a gas station or a mall. An area within a central business district is also a perfect location.
Set up the office and put up a signage to attract traffic. Furnish your office with equipment such as computers, a telephone and some good furniture.
#4 Hire a lawyer for your company
Hire a lawyer to represent the interests of your business. One of the first things your lawyer should do is to help you draft a good contract that minimizes the risk on your business. Remember, the debtor should shoulder all responsibility for the debt.
Come up with lending terms. You may want to do some research into what other companies are offering and try to offer more attractive terms.
There are many modes you could use to promote your business and they all depend on your starting capital.
- Your location might favor you, rendering advertising unnecessary. If you are in a very good location, all you might need to do is to put up a sign on your door.
- If you do not have enough capital, you can use online advertising. This is very effective because most people use the search engines to look for services.
- If you are in San Jose, create online banners for title loans in San Jose and share them in popular websites.
- If you have a high capital base, you can use mainstream media such as radio, TV and newspapers. You can also advertise in monthly issues of auto magazines.
#6 Watch your business grow
Now that customers are trickling into your business, you can start earning attractive interests and watch your business grow.