Have you ever been in a situation where you needed money quickly but didn’t want to take out a high-interest loan from a bank? Whether you need to get a new transmission, pay off an emergency medical bill, or want to take your family on vacation and don’t have the money saved up in time for it. Getting caught with no way of paying these bills can be frustrating and overwhelming at times. Fortunately, there is another option that you may not know about: title loans!
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What is a title loan?
A title loan is a loan that is secured by the title of your vehicle. The title loan company will keep the original copy of the car’s title to hold it as collateral for your borrowed amount. Even if you no longer possess your vehicle, they still retain ownership until the money owed has been paid in full or until you sign over legal ownership back into their name.
Where to get a title loan
Today, and thanks to the advancements in tech, title loans can easily be acquired over the internet. There are sites you can go now, where you can fill out a form with some basic information and receive offers from multiple lenders within minutes. Such an easy process is perfect for those who need money quickly and don’t have time to waste.
If you don’t find the internet your way of doing things, there are still options. Many title loan companies have storefronts in traditional brick-and-mortar buildings these days, meaning you can walk into their establishment to get your money with no hassle at all.
What about the amount of money you can borrow?
While most lenders will let you take out as much money as your car is worth, some may not. It depends on how long it has been since they’ve done a loan for that specific type of vehicle and other factors. You’ll want to ask them first before applying, regardless, though! There are many companies online that offer hundreds or even thousands in loans with minimal credit checks needed, which makes getting one easier than ever.
What are the requirements, and what can you expect during the process?
Like any other type of loan, specific requirements need to be met to qualify for a title loan. First, your age must be at least 18 years old and have a valid driver’s license.
The vehicle being used as security must be a 2005 or newer vehicle and must have no more than 150,000 miles on it. The title to the car must also be in your name. If you have a co-signer on the title, they will also need to qualify for this type of loan.
The amount that can be borrowed against your car is determined by what it’s worth and how much equity there is regarding the price. If you owe more than half the value of your vehicle, then only 50% of what it’s worth may be used as collateral since you don’t own 100%.
There are a few other things that you should keep in mind while taking out a title loan:
- You will need to provide proof of income
- Your car will be subject to a security inspection
- You might have to provide your social security number
If you meet all of the requirements and are approved, the only thing left to do is wait for your check. The amount will be determined by how much you want and what they think it’s worth.
Once you receive the check in the mail, all of this information should go with it:
- The total loan amount
- Loan terms such as repayment schedule and interest rate (varies from state to state)
- Information on where exactly you need to send payment(s) – generally, a PO Box or mailing address will be provided. If one isn’t listed, there may not be an online option available due to laws that vary between states and territories. This can also depend on if your location allows online payday loans at all
What are the benefits of title loans?
- Instant cash
If you’re in quick need of cash, you should consider an instant cash loan. These loans are perfect for individuals who require money on time but don’t want to jump through hoops to obtain it. By amortizing the loan over several paychecks, individuals can keep themselves afloat without having to come up with a huge sum of cash at a glance.
- No vehicle requisition required
If you opt for a car title loan, you can be sure that there is no requirement for vehicle requisition. This is because the collateral used in such loans is your automobile and not other assets like jewelry or furniture.
- No guarantor needed
There is nothing awful as trying to find someone to sign as a guarantor for your loan. The good thing is that you do not have to look any further because there are no requirements for obtaining a title loan. All that matters is that you have the collateral, which would be the vehicle itself, and this could make all of the difference in meeting your financial needs.
- Convenient payback scheme
It is possible to have a monthly payment that fits into your budget and still pay off the title loan within 30 days when it comes to paying back the loan. This can be convenient if you need some cash and don’t want to get stressed out about paying back too many installments in one month, for example.
However, if you feel that 30 days is not enough time to pay back the loan, more extended repayment periods are available. You can speak with one of our specialists to discuss the best repayment plan for your needs. It’s crucial to find a payment schedule that will work best for you to not fall behind on payments and damage your credit score.
- Fewer credit checks
Unlike many types of loans, car title loans do not require a credit check. This is because the loan is based on the value of your vehicle, which is already established through your car title. So even if your credit score is awful or no credit at all, you can still potentially qualify for a car title loan.
- No restrictions on how the loan can be used
Most traditional bank loans come with a lot of strings attached. You may be restricted on using the money or what you can do with the property that secures the loan, not so with title loans. The money from this type of loan can be used for anything you need. Whether it’s a home repair, a new refrigerator, or even for something more luxurious like a vacation.
Title loans are not restricted by how you use the money from your loan. You can apply this to whatever you need help with at the moment.
- Less expensive than cash advance
Title loans are often referred to as cash advances. This is because they both allow you access to money that can be used for any purpose, but the interest rates and fees associated with title loans make them less expensive than other types of payday loan products. Title loans also offer more flexibility than payday loans in that you can use the money for any purpose you choose.
Things you should know before applying for a title loan
While the short processing period makes a title loan an attractive borrowing option for those in need of quick cash, there are a few things you should know before applying:
First, interest rates for Title Loans are high. They’re usually at least 20% per month with no maximum rate. This means that your loan will accrue more interest the longer you take to pay it back, regardless of how much money is still owed on it.
Also, the fees that come with applying for this kind of loan can be costly. Expect to pay an origination fee as well as a late payment penalty if you’re unable to make your monthly payments on time.
Also, if you have active bankruptcy or foreclosure proceedings going on with either a federal court or state housing authority, then you cannot obtain a title loan (and most likely any other type of unsecured personal loan as well).
Finally, always read the terms and conditions of any loan agreement before signing anything. This document will outline the specifics of your repayment plan, including how much money is still owed on loan and when it needs to be repaid in full. Failure to pay your loan on time will lead to additional fees and possible legal action against you. Your car may even be repossessed.
So there you have it: everything you need to know about obtaining a title loan. By being aware of the risks involved and understanding how the process works, you can make an informed decision about whether this type of borrowing is right for you. Keep in mind that interest rates and fees may vary from lender to lender, so always compare offers before signing any paperwork. Good luck!