Start-up cost: $3,000–$10,000
Potential earnings: $50,000–$70,000
Typical fees: Percentage of
loan amount from lender or borrower
Advertising: Classifi ed ads
in local and national newspapers and
magazines,
banner ads on sites like Cars.com, and a Web
site of
your own where people could prequalify for loans
online
(pending your review and approval)
Qualifications: Finance background would be
helpful
Equipment needed: Cell phone
(with or without hands-free accessories), offi ce
furniture,
computer with Internet access and Web site
hosting
capabilities, suite software, printer, fax, business
cards,
letterhead, envelopes
Staff required: No
Hidden costs: Utility bills
What
You Do
A
loan broker brings together the people who need money with the institutions
that
are
in the business of lending it. As an automotive loan broker you will be
specializing
in
a type of loan that almost every household in the country needs. Th ere are
roughly
1.8
vehicles per household in the United States, and most of the new vehicles sold
are
purchased through loans. Th at’s a huge potential market. How can you become a
part
of this picture? You have a list of lenders, a long list. You have obtained
their trust
with
a well-organized business plan. You advertise for borrowers in local automotive
newspapers
and Web sites like Cars.com. It is also possible that local auto dealerships
might
be good referral sources for you, so it would be worth some buddy-up time
with
them. Th e best part is, you don’t have to restrict yourself to your own
geographical
area;
much of this business can be done via Internet (through your Web site) and
by
phone. It is important to have a written agreement before you begin the loan
search
process,
as most of your clients will use your service instead of a bank because they’ve
had
trouble securing credit in a more traditional way.
What
You Need
Th
e borrowers will visit the lender’s offi ce, not yours. Your initial start-up
costs are
your
Web site, some advertising, and the equipment to support your paperwork and
communications;
all of these should be under $10,000. Th e Web site is crucial and
should
include a secure server, since your customers will be sending confi dential
information
via the Internet through your site. Still, you should be able to generate
signifi
cant business if you can promise decent terms. If you have true marketing
savvy,
you
could earn as much as $70,000 from all of your eff orts. In short, the
potential
for
success in this business is high. All you need is the ability to produce. Th e
more
automated
you make your business, the higher your profi t will ultimately be.
Keys
to Success
Clarity
on goals and expectations is vital to the professional, ethical conduct of a
loan
brokering business. You make it clear to the potential borrower what expenses
are
to be reimbursed, and you take a fee only as a commission on a completed loan.
Skill
at bringing the two sides of the automotive transaction together can enable
you
to earn a very high income once you are established. Persistence pays off here,
as it so often does
in the world of small business.
