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. While some smaller companies have closed their doors for good, many more are struggling to find qualified customers and stay financially afloat.
In response to this economic drop in the industry, title loan lenders still in business have had to find ways to adapt. Since lenders must put out something rather than nothing in order to stay in business, small loans have become essential in maintaining the title loan industry during this time. Some lenders are also putting out “micro-loans,” that are as low as $100 and making the process all online. Other lenders have begun working with banks in order to create a new loan product where the funding is bank-owned rather than backed by the title loan company servicing the loan.
Additional auto title loan lenders have attempted to mitigate the issue by setting up a process where the monthly payment drops due to a continually decreasing interest rate. Furthermore, some car title loan lenders are only approving applicants who are extremely low risk, which is not the usual customer base typically served by the title loan industry. These limited low risk applicants now have the opportunity to take advantage of decreasing interest rates and potentially benefit from the industry’s hardships.
The title loan industry has newly adopted procedures to make business as safe as possible, such as online applications, processing payday loans ME, and payments, lenders are collectively struggling to remain financially stable during these unprecedented times.
Some of these types of loans have the ability to drop to some of the lowest interest rates the title loan industry has ever seen
As always, Max Cash™ Title Loans encourages friends, family, as well as yourself to stay protected and healthy by complying with CDC recommendations of staying home and practicing social distancing.
Because of this car title loan lenders have adjusted to everything online, but you will still need to use your cell phone for pictures
Max Cash ™ Title Loans Max Cash ™ Title Loans, owned by Tradition Media Group, LLC, is an exclusive agency that uses a large network of lenders to help customers access title loan services. Max Cash ™ Title Loans handles the title loan processing and customer sales fulfillment and may act as a broker for loans on a case-by-case basis.