Re: fast cash/title loan business.....
- From: mianderson <mianderson79@xxxxxxxxx>
- Date: Wed, 10 Feb 2010 18:08:56 -0800 (PST)
On Feb 10, 6:02 pm, Jim Brown <jimbrown...@xxxxxxxxx> wrote:
On Feb 10, 2:05 pm, mianderson <mianderso...@xxxxxxxxx> wrote:
it's going to be another 14-16 months at least before I can go in on
this(will need to use moonlighting money and maybe liquidate the
rental property to get the capital), but I can't wait.......
one person I know who does it(not in medicine) says that many of the
customers are paying $100-150 a month just to service the "late fees"
and "overage fees" on a loan that was originally $400.......
the example he gave me was of a guy who took out a cash advance
loan(not a title loan) for 500 bucks. He pays $119 a month now(59.50
x 2 for service and late fees), and has done so for the past 8
months. And he actually pays! The balance on that 500 dollar loan is
now 1400 dollars.....the magic of it is that he doesnt have the 1400
to actually pay the loan off, but he does have 119 a month to stay in
"good standing" with the loan.
Hell this 500 dollar loan may turn into 6-8(?) thousand dollars of
profit over the long term.
Why more people aren't dying to get in this business I have no idea.
What happens with the people who dont pay?
well, for starters this group isn't that large because you verify
their employment(and have all the proper paperwork in place to garnish
their check if the need arises) and whatnot before dishing out the 500
but still your question is valid. Let's say they skip town, quit
their job, etc on a 500 dollar cash advance......then as I said you
hit them up with a bunch of late fees/service charges for 3-4 months,
bring the total to 11-1300 dollars, and then sell that 11-1300 dollars
to a collection agency......at usually 15-20% of the balance.
So do you get your 500 bucks back? No...but you get over 200
but for every 1 customer you lose a few hundred bucks on and have to
sell out to a collection agency, there are:
1) 6-7 who eventually do go to collection agencies for nonpayment but
pay you 3-4x the original loan......
2) 7-8 who actually pay it off instantly(these are not good customers
because you only make like 70 bucks or 150% interest on them)
3) 3-4 who pay you 7-8 times the original loan and you never have to
go to a collection agency for.....maybe their parents or a sibling
stepped in and paid it off or whatever.
bottom line- you occasionally will eat a few losses, but hell it's
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