We have heard about a title loan, but not many of us know what it is. Well, if you have been wondering what the loan is all about, how it works, or how you can get one, read through for more information.
What Is a Title Loan?
Before you can acquire a loan, you need collateral. Well, a title loan is a type of loan where you offer your car as collateral. When you go to apply for the loan, you give your car’s title to the lender in exchange for the money.
Most of the borrowers are people who cannot qualify for other loans, so this is their best option. The loan is a short term loan that comes in handy especially during emergencies.
Limits and Amount
This loan being a short time loan is expected to be paid within 15-30 days depending on the terms agreed. You can get as much as $100 to $5,500 or up to $10,000 depending on the lender.
The loan depends on the value of your car. You can get money from 25% to 50% the value of your car. The loan comes at a high interest as expected. At the end of the period, you are expected to pay the full amount plus interest.
Other Types of Title Loans
The type of loan you can acquire depends on the type of car you have. Different types of cars give you different types of funding. For example.
• Truck loans
• RV loans
• Motorcycle loans
• SUV loans
Whichever type of car you drive, you can get a loan.
How to Apply for a Title Loan
This is one of the simplest loans to apply for. Once you have the following requirements, the loan is approved within a very short time.
Before applying for a car title loan, you must have the following items;
• First, you need to show your car and its clear title.
• Have a photo ID
• Have a solid proof of insurance for the car.
• Current vehicle registration
• Recent paystubs or other proof of ability to repay the loan
• Names, phone numbers, and addresses of at least two valid references
• Other lenders may require you to bring an extra set of your car keys.
Once you have these documents, then you can either fill an application form online or at a store near you. After you present the full application, the lender can approve the loan or disapprove.
The lender then inspects your car to determine its value. This is what determines how much money you can get from the lender. You can check here to determine the value of your car. Once the value is determined, your money is calculated at a specific percentage.
You can then decide whether to take the maximum amount your car is worth or just a percentage of it. This all depends on your needs.
If he approves the loan, you still get to keep your car, and you receive the money and the terms and conditions of the loan. The terms of payment are given to you as well as the duration of the loan.
Some lenders may need to put a GPS tracking system on your car. This is an assurance for them that in case you cannot pay in time. They can find and take your car. If the loan period is over and you have not paid, some of these GPS systems can disable your car remotely. However, you don’t have to worry about this if you pay the loan on time.
Some Advantages of Title Loans
The loan is very helpful especially during emergencies. Sometimes life gets us at the worst moments. However, if you have a car and you need quick money, this loan is there to the rescue.
Another advantage of this loan is that anyone with a car can apply. Even with a bad credit report, you can get this loan. This is because the lender only needs to know you own a car he can take if he gives you the loan. It doesn’t matter if you are employed or not. As long as your car is valuable enough to repay the loan, you can get the money.
How Does Repayment Work?
This type of loan is a short term loan. It is repaid within 15-30 days. However, this period may be different depending on the lender.
For people who are not able to repay the loan within the first month, you can decide to push the loan for another month. This is usually called a rollover. A rollover comes with its disadvantages as it adds more fees to the loan. But it is a good choice when you have no other options.
Car title loans can be an expensive source of funds. The interest rates are typically at about 30% per month or 360% annually. For example, if you borrowed $ 1000, you are expected to pay $1300 by the end of the loan period. It can be a dangerous habit if you keep borrowing from these lenders. You may end up paying more money than you borrowed.
Some other lenders may come up with other fees such as origination fees, processing fees, document fees, key fees, etc. Be sure to do your math before signing the contract.
If you are unable to pay altogether, the lender has authority to repossess your car. The law allows him to sell it to pay himself whatever you took from him. With the GPS tracking system, tracking your car is easy. He can get to it as soon as they realize you cannot repay the loan.
FAQs We Know You Have
Who can get a title loan? What are the requirements?
If you are over 18 years and have all the above documents, you can get this loan.
How long does it take to get approved for the loan?
If you have all the requirements with you, the loan can be approved in as little as an hour. After you fill the application and show your car, the lender can immediately know how much to lend you.
Is there a pre-payment penalty?
If you can repay the loan before its time, it is well and good. No fines or charges are placed on you for paying early.
Does the title have to be in my name?
Yes. It is required that the title should have your name. You cannot borrow money using another person’s car title.
How do I get my title back?
As soon as you repay the full amount of the loan you will get your car title back immediately.
Getting a car loan is very easy. Anyone who needs money and has a car can qualify for the loan. However, it is also important to understand the terms and conditions of the loan. It can be helpful sometimes but expensive on the other hand. Before you can acquire this loan ensure you understand everything about it. The interest rates and repayment methods should also be considered.
If you have ever acquired a title loan, you can share with us your experience and how you feel about it.