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Title Pawn Companies Make an Absolute k!lling


 Title Pawn Companies Make an Absolute k!lling
topic by supervillain - 01-23-2010, 11:16 AM - Boxden > The Money Spot (finance/careers)


Came across this article about "Title Pawns"....this is actually some very valuable info...because i bet you might know someone who has delt with these companies...#### I was almost willing to pawn my title when #### got bad for me...we all go through it, tho..just be aware of these types of companies and please ....READ the Contract.

The 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. 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 k!lling 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 k!lling, 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 k!lling 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 loosing 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 loosing their car.

Title Pawn Companies Make an Absolute k!lling


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18 comments for "Title Pawn Companies Make an Absolute k!lling"


 01-23-2010, 01:11 PMaway - #2
big jeffrey 

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wooooooowwwwww, so any ideas how i could start something like this? this #### is interesting
 07-29-2010, 10:45 AMaway - #3
supervillain 192 heat pts192

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Originally Posted by big jeffrey
wooooooowwwwww, so any ideas how i could start something like this? this #### is interesting
its a HUGE business.....that basicallyr###s the poor.
 07-29-2010, 02:44 PMaway - #4
iAM2 

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word.. steal from the poor and sell to the rich.. its what im currently doing.. POW! and its legal! POW! POW! POW! ####s groovy..

and no i dont pawn titles..
 07-29-2010, 02:56 PMaway - #5
"SS" 7 heat pts

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i worked at a company called tennessee title loans part of a bigger company called community loans of america for almost 2 years, and for the most part everything the article said is true, the #### is the biggest rip off you will ever encounter in your life. in tennessee the interest rate on the loan or at least what we tell you the rate is is 22%, but thats monthly the actual apr on the loan is 267.67% yep dam near 300%. and on top of that we were forced to sale this product called continental car club at a price of 15 dollars per month financed into the loan which has no benefits whatsoever but it technically allowed us to charge more interest because if u get a 500 dollar loan what u would would pay in interest each month would be 110 but with 4 months of car club figured in your monthly payment would be around 130. now keep in mind that the interest is just that it never touches the principal, so if u come in for a year and pay just the interest then u still exactly what u did the day u made the loan. i dont know how other states operate but tennessee decided that we were ####in people with this practice so they made it mandatory that u have to reduce the principal by 3% on every payment after your 3rd payment (but its rarely enforced) now thats the business in a nutshell. now as far as the repos laws vary from state to state but in my state if your #### was repoed u had to pay all of the accrued interest+principal+any reposession fees within 27 days in order to get your car back. now if you were in a posistion to come up with that money then chances are u would not get a loan in the first place. now the article stated that the companies make profits from the repoes but that also varies from state to state. we could only by law charge a maximum of 2 months of interest+principal+any repo fees out of what the car was auctioned for. any surplus would come back to the customer in the form of a check. in the whole 2 years i worked there i probably saw a surplus less than 5 times. but i say that to say u would be surprised to see what those cars sold for at auction. a 5000 dollar car might bring 1000 dollars at auction and thats on a good day, only for some shady car dealer to put it on his lot with a 6000 dollar price tag, but like i said once its auctioned what happens from there is not on us, thats another hustle altogether. now my company also did pay day advances i aint gonna jack this guys thread but if u want i can go into detail about those too. or if anyone has any specific questions regarding this industry just post here and i will answer.
 07-29-2010, 03:03 PMonline - #6
UrbanEnterprise 17 heat pts17

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yea i work for a pawn shop, i like my bonus checks :dancingcool:
 07-29-2010, 03:07 PMaway - #7
Illuminated 

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I need to figure out how to get my piece of the pie in this business....
 07-29-2010, 03:19 PMaway - #8
"SS" 7 heat pts

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Originally Posted by Illuminated
I need to figure out how to get my piece of the pie in this business....
i have actually looked into it and from a money standpoint the startup is not that is rediculous because you are not actually selling a physical product. after the cost of a building and getting someone to design your system you only need around 50 to 100 grand in actual money to finance your loans until the interest actually starts coming back in. but the thing is the industry tows the line of being legal or illegal and state audits are common to make sure u dont cross that line, and if u do and they can prove its on purpose that #### comes with hefty fines.
 07-29-2010, 03:50 PMaway - #9
Illuminated 

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Originally Posted by "SS"
i have actually looked into it and from a money standpoint the startup is not that is rediculous because you are not actually selling a physical product. after the cost of a building and getting someone to design your system you only need around 50 to 100 grand in actual money to finance your loans until the interest actually starts coming back in. but the thing is the industry tows the line of being legal or illegal and state audits are common to make sure u dont cross that line, and if u do and they can prove its on purpose that #### comes with hefty fines.
I'm not talking about starting one.
I'm talking about buying a small percentage of ownership into one of these companies.
 07-29-2010, 05:35 PMaway - #10
606robin 5 heat pts

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Damnnn...reminds of the concept behind this
But no in all seriousness it is a great business i got a friend that works at a local pawn he gets nice money and bonus and takes advantage of buybacks and resells on his own on the bay..




 07-29-2010, 06:16 PMaway - #11
coolb07 

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Originally Posted by 606robin
Damnnn...reminds of the concept behind this
But no in all seriousness it is a great business i got a friend that works at a local pawn he gets nice money and bonus and takes advantage of buybacks and resells on his own on the bay..

wow. thats crazy. is judge judy a vampire? look at 2:41
 07-29-2010, 08:31 PMaway - #12
big jeffrey 

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Originally Posted by "SS"
i have actually looked into it and from a money standpoint the startup is not that is rediculous because you are not actually selling a physical product. after the cost of a building and getting someone to design your system you only need around 50 to 100 grand in actual money to finance your loans until the interest actually starts coming back in. but the thing is the industry tows the line of being legal or illegal and state audits are common to make sure u dont cross that line, and if u do and they can prove its on purpose that #### comes with hefty fines.
I thought you were going to say something i could work with... then i saw 50 to 100 -long pause- GRAND. Thats alot of money, how do people start something like this? like i said, I'm interested.

btw, you see the dates on all the replies? starting from the orginal?
 07-30-2010, 06:34 AMaway - #13
40ozHenny 37 heat pts37

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If these people dont have money to begin with and are taking loans, how are they gonna pay the interest and the loan back? How do you ensure you get paid?
 07-30-2010, 06:53 AMaway - #14
Illuminated 

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Originally Posted by 40ozHenny
If these people dont have money to begin with and are taking loans, how are they gonna pay the interest and the loan back? How do you ensure you get paid?
By repossessing their collateral.
 07-30-2010, 06:58 AMaway - #15
Metalzoa 

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Predatory lending practices are wrong. It's the white collar version of being a criminal. Instead of robbing with a gun and a mask you're doing it with a contract and the law on your side. Doesn't make it any more right though.
 07-30-2010, 08:38 AMaway - #16
egotistical 1 heat pts

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Great idea... question though I have known and have many friends, who don't pay their #### and duck and dodge... the tow trucks... so what happens if they don't pay and they duck and dodge... can u legally sue or what?
 07-30-2010, 12:47 PMaway - #17
Ednyce 

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its the same as a pawn shop, just with cars. good business to get into.
 07-30-2010, 01:18 PMaway - #18
"SS" 7 heat pts

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Originally Posted by egotistical
Great idea... question though I have known and have many friends, who don't pay their #### and duck and dodge... the tow trucks... so what happens if they don't pay and they duck and dodge... can u legally sue or what?
honestly nothing if u slip through the cracks u just slip through the cracks, losses are already figured in the budget, also the company i worked for would not even go after certain cars, it was more practical to just write a 200 dollar loan on a 300 dollar car off than to pay upwards of 5-600 dollars repo and auction listing fees for a car thats gonna sell for 100 bucks, but we never told the customer that #### though, we harrassed those type of accounts to know in because makin them come in to pay was the only way we would ever see any money off of them
 08-28-2010, 07:30 PMaway - #19
Wally Vegas 20 heat pts20

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Originally Posted by Metalzoa
Predatory lending practices are wrong. It's the white collar version of being a criminal. Instead of robbing with a gun and a mask you're doing it with a contract and the law on your side. Doesn't make it any more right though.
That #### is not like being a criminal, people are just plain stupid. If you are signing over the title to your car without knowing the ramifications your a$s needs to get got.

Great article as well
 
 


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