According to the 2015 Pew Charitable Trust’s Auto Title Loan Report, two million Americans use title loans annually. Payday loans, pawn lending, or credit card advances are other options when a consumer needs money fast. These unfortunate situations happen – unemployment, unexpected repair, medical bills and more. For lenders, the worry comes from loan defaults or lost collateral. Adding a GPS tracking device can provide a layer of security without slowing down the loan process.
Short-Term and Small-Dollar Loans
A May 2016 article by The Atlantic quoted a Federal Reserve Board survey, “The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all.”
This is where title lending steps in to bridge the gap between temporary lack of income or savings and a payment due date. There are over 8100 stores across the states that permit them. Interestingly, Illinois, Texas, and Virginia make up 40% “of the national market by store count.” The average loan amount, says the Pew study, is $1,000. The most common loan length is 30 days. And anywhere from 6-11% of the vehicles will need to be repossessed (though 15-25% of those are eventually returned to their owners after payment).
Telematics and Timing
These loans are typically made fast – within 15 to 45 minutes states the report. A December 2015 USA Today article referenced Title Max’s 2013 SEC filing which noted that the company ‘promises cash “in as little as 30 minutes”.’ It’s even less time if the borrower is renewing their loan. How can you be sure that you’ve made the right decision?
This is where a telematics solution can help. The GPS device, such as CalAmp’s CVF-620, is quick and easy to use. Just add batteries and secure it in the vehicle. It’s perfect for the typical 24-month title loan term. Buy Here, Pay Here dealers could use the device during tight loan deadlines, say right before closing time. (A more permanent, wired device can be installed later.)
You can monitor all of the collateral devices through a vehicle finance solution like LenderOutlook™ when needed – either at your desk or on your phone. If a borrower defaults on a loan, you can activate the device’s repossession mode to get location notifications every 15 minutes while the vehicle is moving.Lend With Confidence
Title lending provides a service to those nonprime and subprime borrowers who need money fast. It’s the same for buy here, pay here dealers who want to get their customers off the lot and on the road quickly. Using telematics will provide an extra layer of security without slowing down your loan process.