A car title loan is a type of short-term loans that allows the borrower to take out the necessary money extremely quickly. The process of taking out money usually takes not more than two days. It is possible because of the simplicity of a process. The only thing a lender needs is estimating your car’s condition to make sure that a sum of money a borrower asks for corresponds the vehicle’s condition.
Any potential borrower with a car can get a title loan. No credit check is involved in the process of getting a car title loan. Vehicle title loans are secured types of loans. It means that a borrower provides his automobile as a collateral to secure the loan.
A lender doesn’t take any risk, which allows them to have high approval rates with title loans. Title loan is the best option for applicants with bad credit. Having a car provides the possibilities to get what a borrower wants.
A car title loan is also a great option because a borrower can keep the car and still drive it. A lender only requires to leave him a title of the car and a second pair of keys, however a borrower is still able to drive. If a borrower doesn’t fail on paying for a loan on time, nothing changes in his life and he also gets the necessary money.
How do title loans work?
A car title loan is a type of short-term loans. The duration of this loan is usually 15 or 30 days. Any type of vehicle, car, boat, truck, motorcycle, is used as a collateral. The lender estimates the car’s value and offers a loan based on a percentage of that amount. The amount of money a potential borrower can expect is ranging from 25% to 50% of the car’s value. The average loan is $1,000.
Lenders need a borrower to give the title to the vehicle in order to take out the loan. As a rule, the vehicle must be free and clear. However, some creditors hold the title if most of the vehicle loan is paid off. The lender also requires an auto, a photo ID, and proof of insurance.
When a borrower gets the car loan, vehicle title remains at lender’s until the borrowed amount is not paid off in full, plus the lender’s finance and any other fees.
There are two types of car title loans:
Single-payment and installment car title loans. The first type demands that a borrower pays off the loan in a whole sum, 1 month later, and it has an average APR of 300%.
The second type lets borrowers make several payments. The repayment period lasts from three to six months, and has an average APR of 259%.
There are creditors, who also charge origination, processing and document fees. These fees make costs of a borrowing even higher. In some cases, a borrower is also required to purchase and pay for a roadside service plan for an automobile.
If it happens that a borrower doesn’t manage to pay off the auto title loan by the due date, the legislations of some states allow to roll over the loan into a new one. This will let a borrower save the car, but it will increase the owed amount of interest.
Generally, fewer requirements are implied for a potential borrower. And it makes a car title loan an attractive option for covering different expenses.
Car Title Loan for bad credit
Title loans differ from any other type of loans that a borrower could have applied for in the past. In car title loan’s case a borrower’s credit score has no impact on the lender’s approval decision, because lenders do not check it during the process of approval. This loan is backed, meaning that it is secured by a collateral.
A credit check is not necessary because if a borrower fails to repay it on the due date, the collateral will be confiscated to compensate the losses. However, there is another way out of this problem. A lender can also raise the interest rates in order to get more finances.
A potential borrower should remember the fact that a car title loan is a short-term type of loan and has to think twice before applying for it. A borrower must be sure that he is able to repay the loan in such a short amount of time. There should be enough of available finances to cover this type of loan. It is a good idea to plan budget before applying for it. Car title loan is a great opportunity to get fast money, but it can result in loss of the collateral.
How to choose the best car title option?
Any potential borrower, despite of his credit score, wants to get the best fees and terms suitable for his personal financial situation. Here are some tips on how to make the right choice:
- Avoid twisty car title loan lenders.There are some lenders, who focus a lot on the approval process. It is done in order to attract borrowers with bad credit. These lenders hope that a borrower with poor credit score will accept any fees only to have an opportunity to take out the necessary money. An applicant should avoid such type of lenders and try to find a more reasonable one.
- Ask for detailed information.When filling out the application form try to insert as much information as possible and find the lender who promises to give a detailed data about all the terms and rates.
- Use all possible options.Both physical locations as well as online options are ready to give out online title loans. Investigate as many sites as possible in order to get the best rates. Compare all title loan prices. Do the research to make sure you are financially able to work with the chosen lender.
- Thoroughly investigate interest rates.Except for the principal part of the loan, there are additional fees. These fees are usually around 15% to 20%. The best you can do to save your money is to pay back the loan as soon as possible. If it happens that you do not manage to repay on time and ask for extension, the prices rapidly redouble.
- Use the collateral’s possibilities.Remember that a car title loan implies providing a collateral. Some lenders try to set extremely high interest rates, stating that the loan is still “unsecured.” However, a collateral is always used to lower interest rates. And non-repayment can lead to a confiscation of it.
- Invite a cosigner.If it is still hard for a borrower to get affordable rates and terms, a cosigner can help. The cosigner is another person who adds his name to the car title loan. If a borrower chooses this option, it is important to be sure that a cosigner understands his responsibilities. The responsibilities must be also clearly described in a written form.
- Keep in touch with the lender.Nowadays almost all processes are run via the Internet. However, direct negotiation with creditors is of great importance. Do not hesitate to call the lender’s representative and clear all the necessary details.
- Consider alternatives.It may happen that a title loan lender requires more assets to secure the loan. In this case, a borrower must talk to the lender about the available alternatives. Do not let the lender to set higher rates only because there is a co-signer or additional assets available.
Bad credit title loan can still be a good option if a potential borrower goes a bit deeper into the processes. Shopping around the options and using the resources may offer several advantages of high interest loans.
How to apply for a Car Title Loan online?
The process of applying for a car title loan differs from lender to lender. However, there are some basics required by any type of lender. The personal information is obligatory. Vehicle information like the make, model, color, mileage and insurance information is also needed. The information about insurance is extremely important, because with a car title loan, the creditor can ask to purchase more insurance to the vehicle because he may consider it is not enough. This request is normal because a lender controls the title while the loan is in process.
First of all a borrower needs to submit the form and provide a title. The car’s title must be clear and without liens on the car. The car, in most cases, must be repaid in full in order to take out a car title loan. After a borrower provides all necessary data, he is only left to wait for the approval. The lender is to give a call or send an e-mail with the how to proceed next. Everything can be done online, or it may be necessary to go into the office to provide the title and keys.
Are there any Online Title Loan Alternatives?
In case banks refuse you quick-cash financing, there are always other options to meet your emergency financial needs:
- Apply for an installment loan online. It will let you get up to $5,000 at competitive interest rates and convenient terms.
- If you need a small-dollar loan up to $1,000, Online Payday Loans will suit you perfectly.
- Credit card. It is cheaper if you can repay the card balance within 30 days till the interest starts to be charged.
- Get up to $35,000 Online Personal Loan with bad credit. Financing is available within 1 – 2 business days.
- If you are a member of a credit union, consider borrowing form them.
- Ask your relatives or friends for help if it’s not too embarrassing and is not going to hurt your relationships.
- Make some extra cash with side gigs.
- Ask your employer for a payday advance.
- Apply to non-profit financial organizations for emergency relief assistance.
- Pawn some unnecessary items.
Online Title Loan Questions Answered by Prof. Thomas Wright
Can a car title loan ruin borrower’s credit history?
Usually, a car title loan does not have any impact on a borrower’s credit scores. For those, who apply for the first time, most title lenders don’t run a credit check. The process of checking borrower’s credit history, known as a hard inquiry, typically involves taking off five points of a borrower’s credit score.
Is it possible to get a title loan without job?
The proof of income is always required by any lender. However, it can come from several sources like employment, a pension, or social security. A borrower only needs to provide proof of this income, with the help of stubs, checks, mail or statements.
What is a lien-free title?
A lien-free car shows that a borrower fully owns the car title, with no outstanding credits and judgments. Almost all lenders require to have a lien-free car title to take out the loan. Without this, a borrower is not able to trade his title for cash, thus making the title loan unavailable.
Can retired or disabled person apply for a car title loan?
Lenders usually provide service to any type of applicants, no matter what situation they are in, disabled, retirement, medical problems. The only thing needed is some kind of proof of income. It can be a pension or social security income.
Is it possible to take out cash if a borrower lost his title?
A borrower will need to produce a title to be eligible for a title loan in-store. He should contact his local tax office or Department of Motor Vehicles to change the title.
What if a title has two or more names?
If a title has two or more names, it is still accepted. However, all people must visit the store to complete the title loan application process. The lender’s representative will inform a borrower on how to sign the documents if approved.
Is it possible to repay the loan early?
If a borrower repays the loan in full at any time, he is only responsible for growing interest and fees on the outstanding principal through the date of repayment.
How much a borrower can get with a title loan?
As a rule, borrower can get from $100 to $50,000 for a title loan in most states. The amount of a borrower’s loan will be mainly based on his demand, the value of the vehicle and his income.
Is it possible to get a car title loan if a vehicle is registered in another state?
Yes, a lender can give the cash to a borrower, with a car title loan, even if his automobile is registered in another state. The vehicle itself does not have to be registered in the state but a potential borrower for a car title loan does have to prove the residence he applies in.