The Negative Perception of Title Loans – An Interview with Max Cash CEO Fred Winchar

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The Negative Perception of Title Loans

There is an unfair and negative perception of title loans in our society. For years many have been outspoken against the title loan industry. The claims often suggest that title loan companies are loan sharks who want to take as much money from their customers as they can and even want to go so far as to repossess their vehicles.

Fred Winchar, the CEO and owner of Max Cash® Title Loans and its parent company Max Cash, was recently interviewed  His interview sheds some much-needed light on the unfair negative perception of title loans and title loan companies in general. Fred goes into detail about why this perception is incorrect as well as how and why he got involved in the title loan industry.

Founder and CEO of Max Cash Title Loans, Fred Winchar.
Founder and CEO of Max Cash Title Loans, Fred Winchar.

When most people hear the words “title loan,” they get a bad taste in their mouths. There is clearly a negative perception of title loans as well as the title loan industry itself. One big example of this is the claim that title loans have ridiculously high-interest rates. Is this high-interest rate concern warranted?

It’s true, title loans do typically have a high interest. However, there is a very important reason for this. The title loan industry has a high default rate. 1 out of 10 customers have no desire to pay off their loan. Until this changes and more consumers begin to successfully pay off their title loans, interest rates will be high. Basically, if the customers take paying back their title loans more seriously, title loan interest rates will drop considerably.

That being said, title loan interest rates used to be much higher a decade ago. Interest rates were commonly starting around 400% and even going up to as high as 5000%. As the market matured and trusted financial banks and lenders began offering title loans, the rates lowered. Larger trusted financial institutions could ensure lower interest rates because they want repeat customers and positive reviews.

Another positive change these larger lenders caused was greater regulation. State, city, and even county laws have gone into effect to prevent loan sharks from infiltrating the title loan industry. Today the typical interest rate is only around 96% because of these regulations. Actually, my company Max Cash Title Loans, brokers loans with interest rates that decrease after every successful payment. The interest rate can drop all the way down to a mere 36%, which is not far from credit card rates.

The negative perception of title loans and the title loan industry has been damaged by these early bad actors who price-gouged their customers and charged hidden fees. 11 years ago these bad actors populated about 95% of the market. Today, this percentage has completely flipped. Now the bad actors make up only a mere 5% of the market and these are more often than not small “mom and pop” joints.

The public perception of the title loan industry will improve immensely as more people see that it is not the bad thing that it used to be.

You say all that but what about social media? People with recent title loan experience can communicate online. Doesn’t this mean that there is some truth behind these negative claims if they’re shared often on social media platforms like Facebook?

That’s a fair question. Social media is a powerful tool to spread news and form perceptions. However, social media platforms serve as spaces where people can easily jump on bandwagons. Because news is spread so instantaneously on social media, sometimes it’s just easier to go with the flow and accept claims at face value.

The truth is, the claims about title loans on social media are still based on how the title loan industry operated a decade ago. The same arguments are made and are rarely challenged. The negative claims still outweigh the positive because the majority of those discussing title loans have little to no knowledge of how the industry operates today. In other words, the title loan industry is demonized for the past sins committed by companies that no longer operate in this market.

I hope that interviews like this one will help change this negative perception of title loans on social media. Then in no time, the public perception of title loans will be similar to other loans like credit cards, mortgages, and personal loans.

There are other concerns besides high-interest rates though. For example, many people believe that title loan companies want to repossess and then sell their customers’ cars. And this is why the interest rates are so high and hard to pay back. Is there any truth to this belief?

This is simply untrue. Though I understand where this belief may stem from. Again, a decade ago bad actors in the industry did repossess cars. But once the larger more trustworthy companies began to dominate the industry, regulations went into effect making it harder for them to do this. Another factor is that because the larger companies had more capital to invest in the industry, they took on more title loan customers, which resulted in many titles being collected.

Even if the majority of the companies in this industry wanted to repossess cars, it would cost them more to do so than not to. The costs would outweigh the pros by a large margin, making it unprofitable to repossess. There are massive attorney fees and insurance costs that the companies would have to pay to repossess vehicles. Plus, different cities and states have different laws regarding repossession. Navigating and operating that scene is just not beneficial to the companies.

There simply is no financial motivator for these companies to repossess vehicles. Helping customers pay back their loans is far more financially beneficial.

Regarding Max Cash Title Loans, why shouldn’t the customers just go directly to the lender and not waste their time with a middle man like your company?

I like that question because it allows me to explain a little more about who our customers are and what they typically need. Title loan customers normally are turning to title loans as a last resort. They’ve exhausted all other possibilities of getting a loan fast. Often, our customers are in dire straits and need help fast. It’s like an emergency department scenario. While you’re suffering from pain in the waiting room in a hospital’s emergency department, you’re not thinking of anything other than getting the relief you need so the pain will stop.

It’s the same with needing money fast for rent, food, gas, payroll, and many other financial emergencies that arise in daily life. And when you have the option of having someone who’s done all the research and knows all the major lenders’ requirements and rates, why not go to them for guidance? Why waste your time looking into all the lenders yourself and slowly applying to them?

Max Cash Title Loans understands the title loan customer. We are not lenders ourselves, we’re brokers. We just know all the lenders and have access to them. By contacting us first, we’ll find the customer the loan they are looking for faster than they could on their own. Also, we protect them. We’re not after their money, we want what’s best for them because their happiness brings us more business.

Everyone’s situation is unique, and lenders don’t pay attention to this. They either approve you or they don’t. Max Cash Title Loans provides a safe harbor for the customer. The customer has the ability to decide on what to do without the pressure of a title loan salesperson looming over them. They have options and we present these options to them so they can make the best decision for themselves.

The difference of going through Max Cash Title Loans to get a title loan is that we have the customer’s financial well-being in mind over the entire duration of their loan. One call to Max Cash Title Loans is one call to all the lenders but without any hassle.

What gives you, Fred Winchar, the authority to discuss the true nature of the title loan industry? What have you done to deserve this privilege?

11 years ago, I started as a clerk in a small title loan office. It was a bad company like the ones I mentioned earlier. I experienced most, if not all, of the corruption the small lenders committed. I couldn’t take the poor ethics and lack of morality any longer, so I decided to leave. Then I made a pledge to dedicate my time to cleaning up the title loan industry. Over time, I sorted through all the lenders and gathered their information.

Now, 11 years later, I am considered one of the leading experts in the industry. I have consulted and advised many title loan companies and made sure they complied with the laws and treated their customers well. Today these companies are decent, fair, compliant, and transparent and are the leading lenders in the industry.

You have given a good reason for why a customer should pursue a title loan as opposed to other loans, specifically because they’ve most likely exhausted all other options. Are there any other reasons you wish to discuss?

Yes, there is one issue I really want to discuss. Other loans actually charge higher interest than people think. They just disguise the interest in a myriad of ways.

Take the car rental industry for example. They are loaning you a car. When you break down the interest of a rental, you’ll find a much higher percentage than what you expected. Let’s break it down now. The company loans you a car worth 25k. You pay a daily rate of $50, which comes out to $18,250 per year. After tax, the total comes out to $20,987 per year. When all of this is factored, the interest rate of the car rental is 84%. Now tell me, is that much different than an average title loan? And that’s just from a car rental that’s $50 per day. Their rental costs go much higher than that.

Look at it this way – and this brings us back to the first question you asked about regarding high-interest rates – title loan companies are “renting” money to the customer. They’re allowed to get out of the rental agreement at any time as long as they pay it back in full. This is unlike car, apartment, our house rentals, where there are penalties for breaking the rental agreement early. Title loans don’t charge a fee for prepaying all or any portion of your loan at any time.

So, why don’t you read more negative press about car and apartment rentals on social media? If the interest rate is around the same as a title loan – in many cases much higher – than why is it fair that the title loan industry gets all the negative coverage? Max Cash Title Loans wants to change this negative perception of title loans.  The public is being conned into believing myths about the industry and potentially preventing people from getting a fair and fast loan when they need it most.

Oh, before I forget, there is one other aspect of title loans that makes them better than most others. Your credit score will improve once you pay off your title loan, and you weren’t late on your payments. Max Cash Title Loans array of lenders reports to all major credit bureaus. So, not only are you getting money fast with a title loan, you’re also setting yourself up for a better financial future.

The secret of Max Cash Title Loans’ success, is that we think of consequences first and then cater to them by providing the best and safest loan option for the customer to choose. Max Cash is with the customer every step of the way during the duration of the discovery and obtaining their loan. We want our customers to improve their finances and their lives.

As you can see there is a rather unfair negative perception of title loans. And based on Fred Winchar’s interview, we can see that title loans are not much different than other loans. Actually, in many cases, they’re a lot better and more affordable.

To get a better understanding of the title loan industry, visit Max Cash Title Loans’ web page how title loans work.