Auto loan brokers serve as intermediaries between car buyers seeking for auto loans and lenders. They facilitate the process of automobile financing by providing a venue where loan providers could reach out to potential loan applicants. These brokers develop relationships with various lenders so as to obtain loans from them an offer these to clients. In addition to this, loan brokers educate loan seekers and assist them in providing the requirements necessary to obtain loan approvals.
In case you are interested in becoming a loan broker in the state of Virginia, here are some of the useful steps that you need to accomplish in order to become one.
1. Register your business
Although there are no specific requirements to obtain a license for operating an auto brokerage business in Virginia, this should be registered in the state, municipal, and county business authorities. The state of Virginia provides valuable information and detailed services that help the start-up process of the business within the state.
In addition to this, you also need to register the application forms, charters or articles that correspond to the type of your business regardless whether it is established as sole-proprietorship, S-type Corporation or a Limited Liability Company. The registration requires filing fees for the trade name as well as the trademark registration. For the purpose of taxation and zoning, the office of the County Clerk should be informed with the type and location of the business that you have. This requirement is applicable to brick-and-mortar as well as home-based locations.
2. Develop relationships with auto financing companies in the area
Contact all the auto finance companies in Virginia such as banks, credit unions, financing organizations by auto dealers, and other private financial organizations. This is important in developing a database of your possible contacts in the auto financing industry. Your database should also include the size and term of loans offered by these financing companies. As a loan broker, you need to develop a relationship with these lenders in order to be able to provide assistance to buyers who might seek your services.
3. Plan on how you would deal with clients
Try to figure out the processes that you would be using in dealing with each customer’s loan needs. Most car loan brokers would first gather the financial and employment information of their clients. Other brokers also gather credit information, employment and income history, current loan obligations, personal financial status of their customers. You can use these methods in starting the business.
4. Set your own brokerage fees
Many car loan brokers earn their incomes from charges that are collected from customers as soon as they submit their loan application. This charge is usually between $25 and $100 and is not refundable. There are other car loan brokers that earn their income from percentage of the final loan amount. Customers pay for this fee anytime within the loan term.