How to Start a Title Loan Business

A title loan is a short-term loan that's secured by the title of your car.

Loans are generally for 30 days, and if you don't repay the loan on time, you lose your car. Your car's title is issued by your state's Department of Motor Vehicles, and is your certificate of ownership. When you take the loan you must surrender the title to the loan company. The title is returned to you upon repayment of the loan. Some companies even require that you give them a set of car keys. Car title loans are generally targeted at people who have bad credit ratings and are desperate for a loan. The interest charged by the lender can be as high as 50% [source: Miller]. Here's how to start a title loan business:


  1. Know the business Learn the ins and outs of the title loan business before starting your own business. This includes knowing all the business' legal ramifications. Don't do anything that's not 100 percent legal, or it'll be the end of your business.
  2. Have a good business plan Having the right business plan and sticking to it is the best way to make sure your business will thrive. Set down the rules you will abide by, such as the maximum amount of credit you will extend, what rate of interest you will charge and how you will calculate the interest payment.
  3. Secure adequate financing Operating a title loan business requires a lot of capital. Besides needing cash on hand, you should have a line of credit at the bank in the event that you need more cash than you have on hand. You never want to tell a customer is to come back tomorrow.
  4. Licensing Obtain all the mandatory licenses from the state and city you will be operating in [source: Miami-Dade] //]]]]> ]]>