Blog - MicroStockProfit

Monday, October 20, 2008

CYLN.ob Set to Cash in On Car Title Loans

City Loan Inc. (OTCBB: CYLN) plays in one of the most interesting credit markets that I've ever come across.

The company provides loans to consumers and takes their automobiles as collateral. Think you're gonna drive off into the sunset with their dough? The joke's on you, Jack. CYLN.ob equips each car that it issues a loan on with a state-of-the art GPS system that directs the good ole repo man right to your front doorstep should you neglect to pay up.

While condemned by many consumer advocacy groups as one of the worst forms of predatory lending, the number of title loan companies has grown significantly over the past 5-10 because of the massive profit potential afforded by the auto pawn business model.

Massive Profit Potential for Companies Providing Title Loans

For starters, title loan companies typically don't fall under the same category as banks and credit card companies and get away with charging triple digit APRs. And you thought your Amex was bad.

Moreover, loaners typically only give out about 20% to 50% of the car's value, but in many states can retain all of the proceeds collected from sales of repossessed cars for defaulted loans. Many times the auto lone co. comes out of it all with the automobile even after the principal has been paid back, sometimes two times over.

Simply, put the auto title loan market is not exactly a feel good investment idea for most. But, with the economy in a recession and fears of another great depression mounting, consumers are increasingly hunting for cash to keep their businesses running and families fed. Ethical or not, company's like CYLN.ob are cashing in and will continue to do so until the bleeding stops.

Labels: City Loan Inc. City Loan, CYLN, OTCBB: CYLN

Tuesday, September 23, 2008

CYLN Up 3,200%. Quite a Business Model, Folks!

One of our newest portfolio companies, City Loan Inc. (OTCBB: CYLN) took off like a rocket today and is now up more than 3,200% on more than 30,000 shares traded. Apparently, a little pre-market action sent the stock from its previous close - .021 on 9/16 - to .10 today. Shares dipped to an intra-day low of .08 earlier but fought back up to a dime in fairly short order.

For those of you not "in the know" CYLN is in the less than glamorous, but more than lucrative business of providing auto title and auto pawn loans. In today's economy, more and more people are struggling to pay their bills and for those that fortunately own their own cars, CYLN can help.

Although no hard data exists currently regarding the size of the market, from what I've read, experts state that the payday loan market is about $40 billion in size and the auto title loan market is about 25% of that. Quite a bit of opportunity there, folks.

To protect their own keister, they only loan out about 1/2 of the car's worth and have also utilized the help of a lo-jack like device, if you will, that gets implanted into the debtor's automobile. The devices is tiny and reportedly almost impossible to find by the car owner. As long as they pay up in the agreed upon time frame, everybody wins. If not, CYLN uses the GPS tracking technology in their locating device and comes to take the car. Surely not the most glamorous way to take a loan, but, if you've gotta pay the mortgage or feed the kids, its an option. And these days, for many, options are becoming scarce.

From a financial perspective, this one could be a winner. In their most recent quarter, CYLN posted revenues of roughly $1.3M, a gross profit of $674K, and net income of nearly $2M. With $10M shares outstanding, maybe the market is finally waking up to the potential here.

In closing, I'll bring you more about the company in future editions, but the company does plan to expand fairly aggressively from both a geographic and marketing standpoint. So, as the economy continues to take a proverbial dump, CYLN should be one of few public companies poised to cash in.