Max Cash™ Title Loans Analyzes the Challenges of COVID-19 Effect on Title Loan Industry

TEMPE, Ariz. , /PRNewswire/ — Title loan lenders around the United States are currently suffering from a 69% drop, and as high as a 90% drop in other areas of the country. Pawn shops are experiencing unprecedented growth at the same time as Americans try to sell off property for cash.

Online-title-loans are here to stay. “Lenders are changing to help people comply with stay at home orders and avoiding contact,” say Fred Winchar , President of Bolt Loans and Max Cash ™ title loans. “The title loan lenders are doing everything they can to loan money, but they have challenges they have not seen before.”

Typically, title loan lenders generate income from individuals making payments on their loan, as well as occasionally by repossessing vehicles from deferred loans. However, most lenders prefer to make the majority of their income via payments since vehicle repossession comes with other extended expenses such as vehicle storage, security, or disposal when applicable. Also looking to avoid reputation damage, most title loan lenders are hesitant to repossess vehicles, now more than ever.

People who can typically turn to title loans as a convenient short-term financial emergency solution are now unable to receive approval because they no longer have a valid proof-of-income. Since ability to repay the loan is a documented requirement for title loan approval, the spike in unemployed Americans has made it difficult for the title loan industry to accept loan applicants at its typical rate. Title loan lenders want to loan. It is what they do. They are not in business to give money without it coming back at some point.

In tandem with approval rates, funded loan amounts have also drastically dropped for the title loan industry. According to Fred Winchar , President of Max Cash™ Title Loans, “The average loan amount now is approximately $900 , while before the average was about $3,500 .” The current combination of low approval rates and low funded amounts has created a cash flow issue for many title loan lenders, leaving them with limited income to give back to the public through additional loans.