Title Pawn Companies Make an Absolute Killing

The Title Pawn business's can be a highly profitablethe lender loans eight hundred dollars on the
operation. I was truly shocked when I figured out theborrower's four thousand dollar car. Now let's say the
bottom line amount of money these companies make.borrower doesn't pay you your monthly payment and
Most companies in the industry charge the absoluteyou repossess the car. You have just essentially
highest rate allowed by law. In many states there arepurchased a four thousand dollar automobile for eight
maximum interest rates that a title pawn company ishundred dollars.
allowed to charge. For instance in the state of Georgia,Now you the lender then takes the four thousand
the max allowed is twenty five percent. Now whatdollar car that you paid eight hundred dollars for, and
you have to realize is that the rate is monthly. Foryou sale it for above retail on a buy here pay here car
example, if your borrower borrows one thousandlot for six thousand dollars. By the time all is said and
dollars, your monthly interest income due to you thedone you have sold a vehicle for six thousand dollars
lender is two hundred and fifty dollars. Take just athat you paid eight hundred dollars for. Talk about
minute and think about this, that's just what themaking a killing, it happens every day. Many of the title
borrower pays you the lender in interest. So when thepawn lenders will not even mess with repossessing
borrower pays the two hundred and fifty dollars at thecars, or reselling them for a profit. Many of these
end of the month, they still owe you the title pawnlenders simply subcontract out the exit strategy of a
lender the initial one thousand dollars they borrowed.bad loan. They subcontract out to one or more
Now let's look at this from an annual interest. If theindividuals the task of repossessing the car, and
consumer keeps the loan out for twelve months, theydisposing of it to an auto auction or a quick sale to
will have paid you the lender three thousand dollarssmall buy here pay here car lots. These guys are
and they still owe the one thousand dollar initial principalmaking a killing with very little risk.
amount they borrowed.Now think about this, you have a regular flow of
Beyond just profiting from insanely high interest rates,borrowers coming in everyday in desperate need of
title pawn companies also use the business as afast cash. Very few of the customers coming in even
automobile purchase stream for their small buy herequestion the interest rate they are being charged for
pay here car lots. Title pawn companies make anthe loan. The borrowers main concern is getting the
absolute killing with this setup. They lend the consumercash as quickly as possible. Now when it come time to
a maximum of forty percent of the wholesale value ofpay the monthly payment on the loan, any borrower in
their vehicle. Now let's define wholesale value.their right mind is never going to give up a car worth
Wholesale value is what you the lender estimates youso much more than the amount of money they owe
can sale the borrower's car for quickly at an autoyou the lender. These borrowers will do almost
auction. So let's say for example the borrower's caranything to get you the lender your money to keep
retail value is four thousand dollars. But the wholesalefrom loosing their car that's worth more than four
value is only half of this or two thousand dollars. Nowgrand over a eight hundred dollar loan. So as you can
you the title pawn lender agrees to lend the borrowersee, most borrowers will do anything they have to do
forty percent of their vehicles wholesale value, or fortyto keep from defaulting on their loan and loosing their
percent of two thousand dollars, that would be acar.
maximum loan amount of eight hundred dollars. So you