Strapped for money? Even financially stable families sometimes find themselves in a situation where they need money quickly. Unforeseen events can wipe out a person’s savings or ongoing financial difficulties can lead a family to look for ways to find short-term credit. Car title loans are similar to payday loans except you have to pledge your car as collateral. It’s not just a promise on paper. You actually give the lender your car title. Some may even ask for a second set of keys. If you don’t pay, the rental company will take your car and sell it to pay off the loan. Borrowers are usually people who no longer have any other options for obtaining finance.
The borrower brings the vehicle and required documentation to the lender. Although title loan applications are available online, lenders still need to verify vehicle condition and documentation completeness before releasing funds. The lender retains ownership of the vehicle, pawns it, and hands the money over to the borrower keeping the title till you get out of the title loan.
The loan limit is from quarter to half of the car value that is considered a collateral (check Vehicle Title Credit Limits). The client signing the contract undertakes to repay the loan within the agreed period (usually a month), as well as the interest rate and other additional costs indicated in the contract.
Documents you need
In order to be guaranteed to receive a title loan, the client must provide a certain list of documents.:
- Document confirming the ownership of the car
- USA-issued ID
- Vehicle registration
- Proof of vehicle insurance
- Phone number and email
- Working copies of the vehicle keys
Check the requirements and other loan details here. Some companies also request access to JPS in order to track the location of the car or remotely deactivate it if the borrower tries to hide.
It is worth noting that each company puts forward its own requirements, which are always indicated online. You don’t need a good credit history to get a loan. In many cases, you don’t even need to be employed to get a car loan. The probability of its issuance is considered solely on the cost and quality of your car. This is exactly why title loan is an ideal option for unemployed people with bad credit history.
Prices and Fees
Of course, title loans have a fairly high interest rate compared to classic banks. The average annual percentage rate (APR) for such a loan is 400% (interest rate is approximately 33% per month) Accordingly, if you take a loan of 700$, the final amount of your loan will be 931$, provided that you comply with all the terms of the contract.
Most lenders charge a deposit fee of at least $25 to $30. In many states, where the law allows it, organizations can also charge many other additional payments (for example, for documents, data processing, etc.) Sometimes these payments add 25 percent or more to the total loan amount. In order to understand the full amount that the loan will cost you, you need to read all the clauses of the contract that you conclude with the lender. Also, you can use online loan calculators that automatically calculate the final cost of the loan.
The bottom line
As mentioned above, the ideal candidate for a title loan is a person who owns a car, at least 25% of the cost of which can repay the loan amount. Proof of income for the last three months will also be an advantage. If you do not have a certain idea of how you will pay off the lender, the company may have doubts about your candidacy. Thus, if the lender, according to the documents provided, sees that you are able to repay the loan, you have every chance of getting a positive answer.
If you decide to take a title loan, you need to fill out the form on the website, double-check all the information entered, submit it and wait for a response from the company. Usually the answer comes within a few hours.