4 August, 2019

Title Loans

The Best Way to Handle Car Title Loans If you have little or no information on car title loans, this article will provide you with all that you need to know before making your decision. Important Information on Title Loans: How to Get No Credit Check Title Loans As a person looking forward to growing personally and business wise, there will come a time when you may require some extra money for development. In a worst case scenario, it could be that you have a financial emergency that requires payment […]

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The Best Way to Handle Car Title Loans

If you have little or no information on car title loans, this article will provide you with all that you need to know before making your decision.

Important Information on Title Loans: How to Get No Credit Check Title Loans

As a person looking forward to growing personally and business wise, there will come a time when you may require some extra money for development. In a worst case scenario, it could be that you have a financial emergency that requires payment of an unexpected expense, which further threatens your ability to put food on the table for you and your family. Therefore, you may opt to borrow a loan from certain lending persons or agencies. One of the loans at your disposal is a title loan, in which one of your assets will act as collateral. You can borrow this loan online or from your local store. The most common type of title loan is the car title loan, also known as auto title loan.

How Car Title Loans Work

While seeking a car title loan, you should know that your vehicle title will be the collateral. As a borrower, you must temporarily surrender the hard copy of the vehicle title and thus allow your lender to put lien on it, in exchange for a certain loan amount.

For this to happen, you must own your car out right, meaning that it is impossible if there are some pending payments for the car. After requesting the loan, while handing over the auto title, the lender agrees to lend you a certain amount of money, depending on certain aspects. He or she will first appraise the car to determine the right amount of loan to give, and then make an offer.

Most of the time, the offer stands at 25% to 50% of the car appraisal value. Secondly, he or she will ensure that you meet the title loan requirements before lending you the agreed amount of money.

Title Loan Requirements

The lender cannot blindly give you an auto title loan just because you hold a car title, since he or she has to be sure that you are really reliable and will pay up. Luckily, for you to qualify for a loan application here has nothing to do with your credit rating.

This aspect makes people name these loans as no credit check title loans since credit scores hardly matter. Nevertheless, there are still other requirements needed for you to get the title loan.

They include the following:

  •         You must have a national identification card to verify that you are not a minor, state ID card, which is also proof of residency
  •         You must show proof of car ownership, mostly indicated in the car title. Names must match that of your identification card
  •         Must have a stable or reliable income source, since it proves that you are capable of paying the loan as agreed
  •         You must possess an updated driver’s license
  •         In case you are borrowing an amount equivalent to or higher than $2,500, you may need to present full coverage insurance proof
  •         2 personal references to vouch for you are also needed

Payment of Auto Title Loans and Risks

After qualifying for the auto title loan, your application will be approved. Therefore, you will leave the lender’s premises with a check and leave behind the car title as collateral. Car title loans are mostly short-term and thus payable with 15 to 30 days.

They may either be single–payment or installment loans. If you chose the single-payment loan, your lender will expect you to pay up the amount in one lump sum within 30 days. On the other hand, installment loans let you repay the amount in multiple payments over a period of about 3 to 6 months.

In case you take out online title loans, the ability to repay depends on three options, using an automated machine or personally. By using an automated machine, you have to allow the auto title loan company to access the periodical payments directly from your bank account.  

As you pay for your car title loans, you will note that it is a bit costly since the lenders normally charge higher interest rates than credit cards, although they are better than payday loans. Despite that state laws try to make things easier by limiting these interest rates, they still end up being high.

Most auto title loan lenders charge about 25% monthly interest, which translates to 300% annual percentage rate. What’s more, there may be some other fees that you must pay on top of the loan and interest for you to complete all transactions. So at the end of your payment, you may find that borrowing a $1,000 auto title loan eventually costs you $ 1,250, plus others fees.

If you are unable to repay the car title loan, you face the risk of losing the car entirely, since the lender will possess the car, and sell it. According to research done on auto title loans conducted by the Consumer Financial Protection Bureau, many people who borrow car title loans do not repay on time.

Therefore, avoiding car repossession leads them into borrowing a new loan to repay the current loan. As a result, car title loans are known to lead people into a cycle of debt.

Alternatives

While car title loans are tempting since they don’t have strict requirements and are fast to process, they will definitely cost you a lot more money and may end up putting you in a cycle of debt. Therefore, why not explore other alternatives before taking out a car title loan.

The following are some other options:

  •         Credit cards since there is no repossession
  •         Personal loans from your credit union or bank, which will most likely be at attractive rates
  •         Extra income to cater for emergencies
  •         Cutting costs in how you spend your income so that you can save more
  •         Downgrade your car so that you can have one that is not too expensive
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