The global automotive aftermarket industry is expected to grow to be worth $722.8 billion by the year 2020. This will include everything from parts, services, and peripherals to related financial services such as car title loans.
You’re probably familiar with most of the above, but car title loans are less well-known to the general public. If you’re looking for a way to make money dealing with cars aside from the usual buying, selling, or repair businesses. Opening a car title loan operation might be just the thing for you. Let’s take a closer look at what it’s all about and how you can get yourself in business.
What Exactly is a Car Title Loan Business?
Basically, a car title loan business offers its clients short-term loans using their cars as collateral. It is an attractive fast lending option for people that might not have other substantial assets such as real estate to put up as collateral.
The money clients receive is to be paid back with interest over a certain period of time, and if they do not pay up within this time the car’s ownership will be transferred to the loan provider. For many people, it is the most efficient and easily available fast lending option open to them, and this makes it a great business venture to get into.
If this sounds interesting to you, read on for a quick rundown of how you can start your own car title loan business.
1. Starting Up – Franchise or Independent?
You’ll first have to decide whether joining up with a franchise or starting your own independent operation will work better for you. Franchises offer you a lot of support and give you a ‘foot in the door’ since people recognize your brand more quickly. The downside is that you will have to pay them part of your profit aside from the cost of setting up your business.
You will need to register your business name with relevant authorities to get your articles of formation and identification number for tax purposes with the Internal Revenue Service as well as any other permits you may need in your particular state.
3. The Consumer Federation of America
This is a useful resource for any potential business. These guys maintain a list of all the permits and requirements you will need to fulfill according to the state you will be operating in. It’s important to comply with these requirements in order to avoid any penalties, fines, or possible suspensions of your licence to operate.
4. Get Your Lease and Get to Work
This involves finding an appropriate location, regardless of the size of your business. The best place for this kind of operation is somewhere with a lot of people passing by. You want a place that can be easily seen by as many people as possible. Putting up signs and window advertising are good ideas.
5. Set Your Rates
The rates you are allowed to charge on your loans might vary from state to state, but the final decision is yours. The best way to figure this out is to take a look at your competition’s prices so that you don’t end up charging too high or too low. If you’re too high, you won’t get customers coming in, but if you’re too low your business might not make enough profit to sustain itself.
6. Marketing and Advertising
This isn’t too difficult. Traditional advertising methods such as posters, advertisements in the papers, radio, and television are still effective. You should also consider creating a web presence to catch the attention of potential clients online.