Title Pawn Companies Make an absolute Killing

Free Aerial View of Black Suv Running on Road Stock PhotoThe Title Pawn business’s can be a highly profitable operation. I was truly shocked when i figured out the bottom line amount of money these companies make จำนำรถ. Most companies in the industry charge the absolute highest rate allowed by law. In many states there are maximum interest rates that a title pawn company is allowed to charge. For instance in the state of Georgia, the max allowed is twenty five percent. Now what you have to realize is that the rate is monthly. For example, if your borrower borrows one thousand dollars, your monthly interest income due to you the lender is two hundred and fifty dollars. Take just a minute and think about this, that’s just what the borrower pays you the lender in interest. So when the borrower pays the two hundred and fifty dollars at the end of the month, they still owe you the title pawn lender the initial one thousand dollars they borrowed. Now let’s look at this from an annual interest. If the consumer keeps the loan out for twelve months, they will have paid you the lender three thousand dollars and they still owe the one thousand dollar initial principal amount they borrowed.

Beyond just profiting from insanely high interest rates, title pawn companies also use the business as a automobile purchase stream for their small buy here pay here car lots. Title pawn companies make an absolute killing with this setup. They lend the consumer a maximum of forty percent of the wholesale value of their vehicle. Now let’s define wholesale value. Wholesale value is what you the lender estimates you can sale the borrower’s car for quickly at an auto auction. So let’s say for example the borrower’s car retail value is four thousand dollars. But the wholesale value is only half of this or two thousand dollars. Now you the title pawn lender agrees to lend the borrower forty percent of their vehicles wholesale value, or forty percent of two thousand dollars, that would be a maximum loan amount of eight hundred dollars. So you the lender loans eight hundred dollars on the borrower’s four thousand dollar car. Now let’s say the borrower doesn’t pay you your monthly payment and you repossess the car. You have just essentially purchased a four thousand dollar automobile for eight hundred dollars.

Now you the lender then takes the four thousand dollar car that you paid eight hundred dollars for, and you sale it for above retail on a buy here pay here car lot for six thousand dollars. By the time all is said and done you have sold a vehicle for six thousand dollars that you paid eight hundred dollars for. Talk about making a killing, it happens every day. Many of the title pawn lenders will not even mess with repossessing cars, or reselling them for a profit. Many of these lenders simply subcontract out the exit strategy of a bad loan. They subcontract out to one or more individuals the task of repossessing the car, and disposing of it to an auto auction or a quick sale to small buy here pay here car lots. These guys are making a killing with very little risk.

Now think about this, you have a regular flow of borrowers coming in everyday in desperate need of fast cash. Very few of the customers coming in even question the interest rate they are being charged for the loan. The borrowers main concern is getting the cash as quickly as possible. Now when it come time to pay the monthly payment on the loan, any borrower in their right mind is never going to give up a car worth so much more than the amount of money they owe you the lender. These borrowers will do almost anything to get you the lender your money to keep from losing their car that’s worth more than four grand over a eight hundred dollar loan. So as you can see, most borrowers will do anything they have to do to keep from defaulting on their loan and losing their car. The logic behind this particular requirement is that lenders feel if the applicant does not have a job, it is going to be difficult for the applicant to repay the money borrowed. It is a misconception, but that is the fact. That is how it goes, and the applicant does not have a choice other than to fulfill the requirements stated by the lenders. Well, let is think differently. It is not impossible. There is a way you can still avail credit even if you do not have a job. The article tries to explain how to go about getting your car loan with no job and no credit or poor credit ratings.

All secured loans require some sort of collateral or a guarantee. In case of mortgages it is the house that provides the collateral. While going in for car loans or automobile finance, it is the vehicle – the car – that acts as a guarantee. Lenders generally provide around 75% to 80% loan against the guarantee provided. That means if the house is evaluated at $100000, it is possible to get a loan of $75000 to $80000 max. The same is true while availing a car loan. The applicant needs to make a down payment that is approximately 20% of the car is price. The remaining 75% to 80% of the car is cost is provided by the loan provider. The fact is even with a collateral, lenders prefer the applicant to have a job. It is not important whether the borrower can come up with an alternative source of income – that does not count. To get the loan you need to have a “recognized” source of income. And in most cases, the most legit source of income is the job. In short, by just providing the collateral, the lender is not going to grant you the loan unless you have a stable job. While financing your car, as far as orthodox credit lending institutes are concerned, your job is your credit for a car loan.

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