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How to Start a Title Loan Business
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When vehicle owners need quick access to money, one way to do that is by borrowing against their vehicle's title. Title loans can be provided by lending against cars, recreational vehicles, motorcycles and boats. Since people will always need to borrow quick cash on occasion, a title-loan business can be successful regardless of the economy. With the interest rates that lenders charge, it can also be very lucrative.
Obtain the Appropriate License
Become licensed in your state as a title lender. Many states require lending companies to get a license before they can begin lending to consumers. You and pay a fee to get the license. Besides the state license, you will also need to purchase a business license from your local government.
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Register a business name for your title-loan company with the local county clerk's office. This process involves filling out a form and paying a nominal one-time fee.
Choose a Business Type
Incorporate your business or set up a limited-liability company. Both of these options can help protect your personal assets in case one of your customers decide to file a lawsuit against you. If you want to incorporate, you will need to file articles of incorporation with your state and pay a filing fee. If you choose to use a limited-liability company, you will need to file articles of organization and pay a fee.
Write Up a Business Plan
Once you've chosen a name and a business type, you're ready to draw up a detailed business plan. The should clearly list your objectives, target market and company strengths. You'll also need to list all expected expenses before projecting the profits you think you'll earn in the first year. If you plan on hiring employees, you can also create a section on the business plan that details each employees title, expected duties and salary range.
