Business plan for a car pawnshop - step-by-step instructions for opening from scratch

Step-by-step plan for opening a car pawnshop

Having experience will be an advantage when starting a lending business. This will allow you to avoid problems and mistakes in the future when building your company. Step-by-step instructions on how to open a car pawnshop are quite simple:

First you need to create a high-quality business plan for a car pawnshop. Calculate how much money will be required to open a business. It will help not only to obtain funds for its implementation, but also to attract potential investors.
After you have come up with a name that necessarily contains the word “pawnshop” in its design, you should proceed to registering a legal entity. It is optimal to choose an LLC organization, although the law does not prohibit the use of OJSC or CJSC. When registering a limited liability company, you need to collect a minimum package of documents.
Find a place to park cars that clients will leave as a deposit.
Organize the work of your own service station.
Choose a location for the office and arrange it.
Create internal documentation (hire agreements, charter, orders and other documents)
Hire staff.
Organize advertising for a car pawnshop.
Hire security to ensure the security of the parking lot and office.

By following all the above steps, running a car pawnshop business becomes achievable.

Planning

A car pawnshop as a business must be conducted according to plan at all stages of formation and development. Its main guidelines are profitability and the absence of excess collateral. The planning of this credit enterprise includes several items. The first is a business project. First, the economic efficiency and feasibility of raising borrowed funds are taken into account.

In this case, costs and the approximate average level of profitability for the reporting periods are calculated. The project is a step-by-step plan for the creation and development of this commercial enterprise.

The entire business plan of a car pawnshop is based on the cornerstone indicator of its profitability - the average interest rate. A thorough legal review of contracts concluded with clients is also important. They should not have loopholes that create costs for business. A penalty mechanism should be provided for client delays. The mechanism for selling pledged cars should be as effective as possible. It is advisable to do this through a car dealership, whose specialists have already initially assessed the vehicle before pledging it.

A business plan for a car pawnshop should also take into account its operating capacity: the expected number of customers per day, the average amount of the deposit, the stages of increasing the dynamics of work, the possibility of attracting funds and specialists to the business.

Documents to open a legal entity. face

To start operating a car pawnshop, you will first need to collect a package of documents for registration. You must provide the tax authority with:

application for registration of a car pawnshop;
constituent documents or notarized copies of documents;
agreement on the creation of a legal entity faces;
receipt for payment of state duty.

The application must indicate OKVED codes. A car pawnshop can engage in lending, information, storage of property and consulting. The following codes are suitable for this activity: 62.22.6, 67.13.5, 74.14. The optimal taxation system is general.

Risks of a car pawnshop

The main risk of a car pawnshop is associated with checking the car for cleanliness, that is, for the absence of encumbrances on it or for its possible criminal origin. The particular risk of having encumbrances on a car is not only the possibility of losing money that was issued as a loan, but also being subject to an unpleasant procedure with the police on suspicion of concealing property of criminal origin.

The most common type of encumbrance on a car is its purchase with credit money. According to some data, the number of cars purchased on credit in Russia reaches 40-45%.

So, other types of encumbrances most often encountered in practice include:

the car is under arrest by bailiffs for various reasons (debt for alimony, utility bills, non-payment of taxes, and so on;
The car is leased without the right to sell or pledge.

The main ways to check a car for encumbrances include:

Check through credit bureaus.
Check with the Federal Bailiff Service to determine whether property has been seized.
Check with the traffic police for any encumbrances.
Check through the registry of collateral.

There are a number of Internet services that allow you to quickly check a car using the state registration number of the car or its VIN number.

It is not always possible to check the presence of credit encumbrances on a car. Let's assume that the car was purchased for cash, and the buyer received the money from a bank loan. If the buyer does not pay the loan, then by court decision the bailiffs may obtain the right to sell the car to pay off the debt. In this case, you will have to solve the problem through the court, which will not necessarily be on the side of the car pawnshop.

Another risk of a car pawnshop, arising from the first, is the acceptance of a car as collateral when operating it under a general power of attorney. If the power of attorney does not directly indicate the possibility of handing over the car as collateral, then it is better to directly contact the owner of the car and confirm this possibility. In practice, this is not always possible, since scammers use various schemes to circumvent the rules of a car pawnshop. We do not recommend that car pawnshops accept cars transferred by proxy as collateral, since the risks of this option are quite high.

There is some risk in the quality of the car's appraisal by the auto pawnshop appraiser. Of course, the appraiser can be very qualified, but an unscrupulous borrower can use fraudulent schemes that are difficult to track down with a superficial inspection, for example, twisting mileage or even altered car numbers.

According to experts, the number of problem loans for car pawnshops is 5-10%. Be sure to consider the risks of opening a car pawnshop when entering this business. Please note that the cost of a mistake can be quite high; the loss of even one mortgaged car can wipe out all the profits that you have worked hard to earn for a year or more.

With a high-quality car assessment procedure, all these risks can be minimized, but there is always a human factor, which can be skillfully exploited by fraudsters or unscrupulous borrowers.

The need to obtain a permit for a car pawnshop business

As such, such permission or license is not required provided that you have a legal address. All work is based on Law No. 249 “On Pawnshops”. It says that the company can engage in short-term lending to individuals. persons The loan term does not exceed 30 days. Insurance is required for collateral vehicles.

Choosing an office and guarded parking lot

What does it take to open a car pawnshop? Profitable rental! This is an axiom of this type of activity. Therefore, let us draw your attention to one more aspect of the preparatory work: concluding office rental agreements, as well as using paid parking services.

Fortunately for auto pawnshop businessmen, the size of the office is not critical for the profitability of this business. The savings are obvious, since the area of the rented premises can be small - within 100 m2.

In addition, it is not at all necessary to rent an office in the center, which also significantly reduces the amount of rent. You can also rent it in a residential area (customers are motorists).

The main thing is that there are busy streets, highways, and parking nearby.

However, just an office is not enough for this business. What else do you need to open a car pawnshop? A place to store collateral.

The high price of collateral requires careful and safe arrangement of the location of collateral vehicles in order to avoid all kinds of risks. The Federal Law “On Pawnshops” places full responsibility on the pawnshop for storing the collateral. Storage rules must be scrupulously specified in the car pawnshop documentation.

You can equip the warehouse premises, equipping it with an alarm system and providing 24-hour security. There is another option, cheaper - a contract with guarded parking. In any case, special attention should be paid to the safety of pledged vehicles.

It should be noted that if it is possible to retrofit the place where pledged vehicles are stored with additional security and anti-theft means, then you should not save on this.

What advertising to use to promote a car pawnshop from scratch

The most important thing at the initial stage is to attract customers. All possible methods are suitable for this. Today it is very easy to advertise online. For this purpose, new groups are formed on social networks, information is published on message boards, forums, and so on.

We must not forget about outdoor advertising. Bright neon signs, posters on billboards, banners in the city, distribution of flyers and much more. It would also be useful to use the media and TV.

Conditions for obtaining a loan in the Russian Federation

Getting a loan from a car pawnshop is much easier than from a bank. The borrower is not required to provide information about place of work and salary; credit history and the presence of guarantors are not important. The requirements for the client are minimal: Russian citizenship, legal capacity, reaching a certain age (most often 18-22 years old) and owning a car. Some pawnshops are ready to work with foreigners, others are willing to accept cars under a general power of attorney, but these are only exceptions to the general rule.

Only the most basic documents are required:

borrower's passport;
vehicle passport;
vehicle registration certificate;
sometimes – CASCO policy (if the client wants to keep the car for the duration of the loan).

How much can you earn if you open a car pawnshop?

You should focus not only on the interest received on the loan, but also on the possibility of resale of cars. On average, the amount payable to the borrower ranges from 70 thousand to 2 million rubles. If the owner returns the money within 10 days, the pawnshop will receive 2 to 3% profit. After a week, the percentage increases to 7%. According to statistics, approximately 15% of car owners do not return for their car. Then the car pawnshop has the right to resell the vehicle.

You can roughly calculate your monthly income:

The average price of a car is 300,000 rubles. The car pawnshop pays the borrower 70% of this amount. Let’s assume that 30 people contacted the organization in a month, then earnings will be approximately 865 thousand rubles.

Other nuances for obtaining constant profit:

It is necessary to clearly understand how many parking spaces a car park should include. As soon as the consolidated place on it ends, the activity of the car pawnshop will cease, which will incur losses.
When concluding a contract with a client, all details must be written down. The loan term should not exceed 1 month.

What makes it easier to get a car loan?

What matters is the market attractiveness and liquidity of the collateral vehicle (bus, car, truck, motorcycle). It must be in working order. In this case, the size of the possible loan reaches 90% of its cost. In this way, through the proper condition of his car, the client maximizes the money he receives on the security of the car.

As follows from practice, on the eve of a visit to a car pawnshop, it is advisable for the client to call back the phone number provided on the website to agree on a service time.

The company's employees, having quickly assessed the market value of the car, will issue cash almost immediately. The lending conditions are standard (short-term terms are usually 30 days, the interest rate for using the loan ranges from 3 to 4%).

The services of a car pawnshop are aimed at generating income from interest on the loan, funds for the penalty for the safety of vehicles and for the sale of unredeemed cars.

Equipment for opening a car pawnshop from scratch

A car pawnshop, whose business plan is almost completed, requires the availability of appropriate equipment. In the office, employees must be provided with organizational information. equipment and computers for creating documents.

Car parking needs special attention. In order for the borrower to be confident in the safety of his car, he will need to organize a security system with video surveillance. Cameras can also be installed in office premises.

Business Investments

To open a car pawnshop you need:

registration of an enterprise - about 10 thousand rubles.
Office - rented or your own. Of course, it is better to buy a small space, but for the first time you can also rent. Rent is different in different cities, and throughout the city too. Therefore, it is difficult to enter this column. Approximately, it will require 10 - 50 thousand rubles.
Rent a parking space. Again, we look at the population; if the city is large, then more space is needed. For a small town, 20 - 30 places will be enough; for a large town, you can start with 100 places. Estimated price: 100 thousand - 1 million rubles.
Money for loans: 1 million - 10 million rubles.
Security: 20 - 100 thousand rubles. To pay specially trained people.
Managers' salary: 20 - 100 thousand rubles.
To check and put cars in order, you need: your own auto mechanics and a place where they will repair and check the cars. Not a cheap pleasure, since equipping this place costs from 1 million to 10 million rubles. Don't forget about your salary.

The calculations are approximate, it all depends on the level at which the business will open. The total is: 2 million 180 thousand - 21 million 160 thousand rubles.

You can also think over an investment system for investors. Deposits for individuals and legal entities. Of course, they should be less than interest on loans.

Compose proposals that describe the complete business plan, they need to be distributed to all large companies and high-ranking officials. Don't forget to list the benefits for investors. This could be some percentage of revenue.

How to choose and open office space

For the convenience of staff and clients, the office should be located in close proximity to the parking lot. Today, underground car parking is often used, and premises are installed in the building itself.

To save your own money, you can rent or buy an office in a residential area. An important aspect of success is a densely populated area. It is better to choose buildings near shopping centers. The office itself requires an equipped place for a cashier and a place to store finances.

Financial indicators of the car pawnshop

To calculate the financial indicators of the economic efficiency of a pawnshop, we will take the average interest rate on loans issued by a car pawnshop in the amount of 6% per month. The profit of a car pawnshop directly depends on the amount of working capital raised, which is issued as loans. In our opinion, the amount of working capital should be about 10 million rubles. In this case, if they are fully spent during the year, the marginal profit (direct profit without taking into account operating expenses, that is, expenses for supporting current activities) of the car pawnshop will be about 7.2 million rubles per year.

In practice, in small towns, with a small number of car pawnshops, the interest rate, due to little competition, may be higher, but even there, when entering the market, a new company needs to offer especially favorable conditions for clients in order to attract its first customers. Therefore, we consider a rate of 6% per month of the loan issued to be economically justified.

In practice, ensuring the full use of working capital issued as a loan is quite difficult, since financial resources must always be available, and the borrower usually needs money immediately, that is, he cannot wait for the required amount to become available. Therefore, we will take the average load for issuing loans at 90%. In this case, the marginal profit of the car pawnshop will be about 6.48 million rubles per year or 540 thousand rubles per month.

We will not take into account the amount of profit from the sale of unredeemed cars, since with a loan in the amount of 80% of the cost of the car, taking into account the costs of its subsequent sale and withdrawal from circulation for the period of sale of working capital, as well as taking into account the discount for the quick sale of the car, will not bring any significant additional profit for the car pawnshop.

Operating or current costs of a car pawnshop

Significant expenses will include the costs of maintaining an office and parking for pledged cars. It is undesirable to locate the parking of pawned cars in “dead” places. Since the risk of theft or damage to cars is much higher. Do not forget that the pawnshop bears full responsibility for the property transferred to it for storage. It is advisable that the car pawnshop be located in close proximity to the notary’s office, since transactions involving the transfer of property as collateral must be notarized.

Ideally, the parking lot should be located directly next to the office, since documents and funds will be stored in the office, which also require increased security. You can rent part of a paid parking lot owned by another organization, however, security in this case is provided by a third-party company, which is not always safe.

The total cost of renting an office space located in a guarded parking lot will be about 60 - 100 thousand rubles per month, depending on the region and location. Once again, we remind you that parking is a very important part of keeping your business safe. It must be equipped with video surveillance systems, a panic button and a security post that provides year-round security of the facility.

Auto pawnshop staff (salaries are indicated for regions):

Security, at least two people, with a salary of 25 thousand rubles per month.
Manager-appraiser, at least two people, with a salary of 40 thousand rubles per month. We need two people to ensure the operation of the auto pawnshop with a ten-hour schedule (daily, seven days a week).
Accountant-cashier, with a salary of 30 thousand rubles per month.
Secretary, with administrative functions, to answer telephone calls and perform office maintenance functions, with a salary of 20 thousand rubles per month.
Payment for the services of an engaged notary and lawyer. Only large car pawnshops can afford to have their own specialists, but their involvement, at least partially, is mandatory for the functioning of such a business. The cost of paying for their services will be about 30 thousand rubles per month.

Total wage costs will be about 210 thousand rubles or 270 thousand rubles per month, taking into account wage accruals.

As you can see, we do not charge the minimum staff wages that are available in this segment, since significant demands are placed on car pawnshop staff. For example, an appraiser manager must have certain professional skills: a high degree of communication skills, good computer skills for legal verification of the quality and purity of collateral, skills in assessing the technical condition of a car, and other skills.

Additionally, the structure of operating expenses should take into account the costs of utility bills, an alarm button for calling private security, office maintenance costs, advertising, taxes and other expenses. In total, such expenses will amount to about 90 thousand rubles per month.

Thus, the total costs of ensuring the current activities of the car pawnshop will be about 440 thousand rubles per month.

The profit of a car pawnshop under the above conditions will be about 100 thousand rubles per month or 1.2 million rubles per year.

The initial investment in this business, with the exception of investment working capital in the fund for issuing loans, is relatively small. These are, first of all, the costs of starting a business, purchasing office equipment and the necessary software. In some cases, it will be necessary to provide the parking lot with visual control and alarm systems. In general, if we rent a high-quality ready-made site with a parking space and office space, then investments in fixed capital can amount to about 300-400 thousand rubles.

The payback period for investments in the project that are not allocated to working capital for issuing loans will be about 3-4 months.

In the cost structure, it is advisable to provide for the creation of a reserve fund to cover losses that may arise when a car pawnshop incurs losses due to the fault of unscrupulous borrowers or staff errors.

Cars for collateral

Before concluding a contract, you will need to check all documents. These include:

passport and its copy (remains at the pawnshop);
PTS;
MTPL policy (at your discretion);
car registration certificate;
driver's license.

It is not enough to simply look at the availability of papers. You still need to verify all the data so as not to stumble upon scammers. Some organizations prefer to set an age limit.

Basic requirements for cars:

From 2005 onwards
Availability of reliable mileage.
No damage (or the amount is reduced).

You should carefully check the car at a service station, where any defects can be identified. Remember that mileage can always be adjusted. To roughly understand the number of kilometers traveled, it is enough to assess the state of wear of the steering wheel, seats, etc. It would not be superfluous to conduct computer diagnostics.

Using special instruments, the thickness of surfaces is measured. This will make it clear whether the car is damaged or not. Putty and new paint may have been used.

Important! It is imperative to check that the car is not seized or pledged.

Calculation of expenses and profits

You can get your investment back in a short time if everything is done correctly. Payback also depends on how many clients will come. If we consider the costs that we described at the beginning of the article, then we can assume that this business will pay off in 2 years.

The calculation in average percentages for Russia is 33%.

Let 30-40 people come a month and the estimated cost of the cars is about 450 thousand rubles. The monthly income will be approximately 850 thousand rubles. Minus the costs of salaries, new equipment, repairs, etc.

It turns out that you can get into profit earlier, but statistics show that it takes about 2 years.

Car pawnshop as a business – possible risks

There are risks in every business and before opening a car pawnshop, they need to be carefully studied. To begin with, you should check each unit of the state and their further work. You should also be wary of your clients. Often they try to pawn cars by proxy, and then the owner comes and takes the car.

Forgery of documents is also not uncommon these days. They must be treated with extreme care. If you follow all the rules and act according to the planned scheme, then the auto pawnbroker will quickly become a plus and begin to make a profit. Opening such a difficult business has become more accessible today.

Development of car pawnshops in Russia

This business appeared in the world a long time ago. He came to Russia relatively recently. Back in the early 80s, it was not profitable to open a pawnshop of this type. People simply didn't have cars. Now a family may have more than one car.

In the early 90s, business began to gain momentum. Auto pawnshops have begun to open all over the world. But this was not regulated in any way by law. And only on July 19, 2007, Russian Federation Law No. 196 - F36 was issued.

Benefits for an entrepreneur:

even with small percentages, the result is a round sum;
if the client does not come for the car, then the car goes to the entrepreneur. And if we assume that pawnshops give out a lower value for the car, then you can make a lot of money.

Mandatory condition: the car must be in good or perfect condition.

Due to the large profits, many people want to open a car pawnshop, but do not have sufficient knowledge. Let's figure it out.

What is a car pawnshop

A car pawnshop is a non-bank credit organization that issues funds secured by vehicles. As a rule, we are talking about passenger cars, but this is not necessary: pawnshops work with cars and trucks, motorcycles and scooters, construction and loading special equipment, motor boats and boats.

Transport takes up much more space than jewelry, expensive watches or antiques. Therefore, opening a pawnshop that specializes in cars is much more expensive than starting a traditional non-bank organization that accepts jewelry as collateral. Your main expense item at the stage of opening a business is renting or purchasing premises and equipping a guarded parking lot for pledged cars. You will also need working capital - finance for lending to clients.

The payback period of the enterprise is about 2 years. On average, opening a pawnshop costs 500 thousand rubles or more, and to issue loans at the start you will need at least 5 million rubles. If you do not have enough money, you need to find partners or investors. But to convince others to invest in the enterprise, you will need a clear business plan with calculations of costs, risks and monthly income.

Drawing up a business plan

A business plan is a document with a detailed calculation of risks, financial investments and future profits, taking into account the specifics of the enterprise: location, target audience. It should contain the following points:

Description . An introductory section describing the concept, target audience, approximate cost of services, staff size. This is a short summary that you can read to get an idea of the project. An approximate description of the concept is shown in the illustration:

Legal part . Information on registration of a legal entity, office and parking rental, as well as other documents. The papers must be attached to the business plan.
Market research . This section is devoted to competitor and risk analysis. Suffice it to say that more than half of Moscow pawnshops close in the first year due to unexpected expenses. In order not to repeat their fate, you need to study the volume, structure and dynamics of the market.
Marketing plan . Describe how you position your business and how you plan to advertise it. Calculate your marketing budget.
Investment plan . A schedule for attracting investments will be required, indicating each individual area: working capital, office and parking renovations, purchase of equipment.
Operational plan . Calculation of current expenses, demand forecast for each month and season.
Financial plan. Choose a tax system, calculate tax and insurance contributions. Also, this paragraph of the business plan must contain a calculation of expected income, profits and losses.
Performance analysis . Gives answers to the question of how long it will take for the enterprise to pay for itself. It should also contain a financial analysis of profitability and profit calculation, determining the break-even point.

Drawing up a business plan requires knowledge and skills. You can't create an effective plan after first hearing about net profit and competitor analysis. If you have never done preliminary financial calculations before, seek help from a specialist, or at least consult with one.

Procedure for issuing a loan

Before using the service of receiving money secured by a vehicle title, you should learn more about how a car pawnshop works and how a loan is issued. First of all, the proposed collateral is assessed, that is, the liquidity of the car acting as collateral is checked. The decisive factors are:

Age of the vehicle. Domestic cars can be pawned provided that they were produced no earlier than 2004. There is no such restriction for middle-class foreign cars.
Car serviceability. Everything is simple here: car pawnshops are extremely reluctant to take damaged cars and those that are in disrepair.
Legal purity of the vehicle. The car is checked in all databases to determine whether it is listed as stolen or as a bank pledge, whether it has restrictions or encumbrances, problems with the VIN number and re-registration.

The pledged vehicle must undergo an independent expert assessment, during which its real value is determined. It directly determines the size of the loan that a car pawnshop can provide to a client and the period during which you will need to repay the borrowed funds. The potential borrower himself is no less carefully checked for adequacy and solvency. The loan is issued to officially employed citizens of the Russian Federation who have registration at their place of residence, a certificate of income and a good credit history.

How does the registration process work?

You can get a loan from a car pawnshop in one day, since the application procedure is quite short:

The client can leave a request on the website or by calling, or can immediately come to the organization’s office.
A preliminary assessment of the car is carried out, approximate conditions are discussed.
If the client agrees to the preconditions, a full technical inspection is carried out and a final offer is made. It is possible that the inspection will not be carried out near the pawnshop’s office.
The legal conclusion of the transaction is carried out: drawing up a loan and encumbrance agreement.
After signing all the papers, the borrower transfers the car or title to the pawnshop and receives the money in the manner specified in the agreement: in cash, to a bank account or card.

If the car pawnshop operates legally, then there is no need to worry about the abandoned car. By law, a pawnshop does not have the right to use collateral and must ensure its safety. Advanced organizations even allow customers to monitor their vehicle through online CCTV cameras.

Rules for choosing a car pawnshop

A modern car pawnshop receives income from its activities through interest received from borrowers for using loan funds. From this financial organization you can borrow a fairly large amount for a certain period of time secured by PTS with a small interest, the amount of which, as a rule, is only 3–7% more than the annual payments on a bank loan. Car pawnshops that you can trust have an impressive customer base and their own official website, where you can carefully study the conditions for providing money secured by a vehicle title and read reviews from those who have already used the services of this institution.

Modern car pawnshops offer two types of loans secured by a vehicle title:

After receiving funds, the borrower cannot use his car until the loan is fully repaid.
The borrower continues to use his car subject to an increased interest rate as a reward for using borrowed funds.

The second option may seem more attractive at first glance, but in fact it is used by those for whom it is not possible to remain “without wheels”. The interest rates on these terms are too high.

What happens if you don’t comply with your obligations to the car pawnshop?

If you violate the terms of the contract or refuse to fulfill your obligations for one reason or another, the organization receives compensation for damage in the form of your car, selling it on the secondary market. Sales times vary, depending on many factors. As a rule, cars are sold through “our own channels” or through intermediaries at appropriate auctions. At the auction, the car pawnshop sets a price that will cover the car pawnshop's losses, and at the same time will be competitive in the market.

A car pawnshop is a profitable service if you need money urgently, and you only have a car as your property. However, before contacting this kind of organization, I recommend that you carefully study the history of the company, as well as learn more about it and its conditions so that later you do not have any questions or controversial situations. You should carefully read all the documentation and comply with the terms of the contract, only in this case you will be able to get a profitable loan and, after repayment, pick up your car.