A title loan company such as City Loan, which is located in Long Beach, provides loans to clients in California, Texas, and New Mexico who have a poor credit history – or no history at all. The collateral used to secure the loan is the client’s car, which must be fully paid-off or close to paid-off (with the remaining balance being rolled into a loan.) The value and condition of the vehicle is virtually the only factor determining the maximum amount that can be lent. The loans are usually paid via Money Gram, wire transfer, or check, with a mutually agreed interest rate, and the loan must be repaid in monthly or biweekly installments.
Borrowers who get title loans must allow a lender to place a lien on their car title, and temporarily surrender the hard copy of that title. When the loan is repaid, the lien is removed and the car title is returned to its owner. If the borrower defaults on payments, then the lender is allowed to repossess the vehicle and sell it to repay the borrowers’ outstanding debt.
The appeal of title loans is that they can often be acquired in 15 minutes or less, on amounts as low as $1,000 in some states. The practice of title lending first emerged in the early 1990s and opened a new market to individuals unable to obtain credit from traditional lenders. Given the overall situation of the U.S. economy in recent years, they have become increasingly popular, according to reports from the Center for Responsible Lending and the Consumer Federation of America.
Indeed, as a representative from City Loan, headquartered in Long Beach, CA comments:
“We are seeing major growth at City Loan and are able to make this happen because of how well we have fine-tuned our processes and messaging, combined with the general growth in the industry. There is a great need and we are filling it.”
On the issue of growing and developing title loan companies, Heather Topham Wood, writing on Chron, a business website of the Houston Chronicle, makes some very interesting suggestions as to how such companies can advance their business in the face of competition.
For example, it’s possible to increase sales by offering customer incentives and competitive loan rates. Wood’s additional ideas include:
- Speeding up processing of applications. The main reason why a consumer needs a title loan company is to get money quickly.
- Giving a fair value loan for the car title.
- Launching a referral program. Reward customers who refer others to your business by giving them cash back or promotional products.
- Increasing the length of loan repayment. Broaden the customer base by offering more payback options on the loans.
- Marketing the company aggressively. Advertising should emphasize that customers are able to get loans quickly and without a credit check, from a trustworthy company.
Despite their current success, City Loan recognizes that there are always opportunities for developing and growing the business, particularly with returning clients. The company is currently providing title loans in three states – California, Texas, and New Mexico – but over the next few months, City Loan is planning to expand its services to Utah, South Carolina, and Missouri to take advantage of the industry’s growth, and will doubtless be taking many of these ideas on board.
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