A title loan is a fast way to get a loan without worrying about the credit score. You just need to have a car title and use it as collateral to get the loan in quick time.
A title loan also known as vehicle title loan or car title loan is an easy way to get installment loans for bad credit using vehicle’s title as collateral instead of credit score. It is a very popular and fast way to get short term cash with a high-interest rate for the borrowers who have a weak credit history.
The size of the loan mainly depends on the amount of money you need, current market value of the car and your ability to repay the loan. The processing time may take only 15 minutes to an hour. Importantly, the process can be completed via online without having car insurance depending on state or lenders’ policies. The best news for the borrower is he or she can have the possession of the car as long as the installments are paid.
How to Process Title Loan
A title loan is the fastest way to get a loan for a short term when you don’t have a good credit history. Most importantly, the loan is processed with 30 minutes to maximum an hour, but to get that in this short time you have to keep few important documents. Unless, you have these documents you can’t get a title loan, no matter how hard you try. To get a title loan within a quick time, the borrower must have following things:
- Government-issued id card, passport or a driving license
- Proof of residency
- Proof of income
- A car title with proper registration and references
- Car insurance depending on the lender’s policy
Once the borrower gets these documents he can find the online or local location of the title loan lender. Most of the lenders will let you get a loan equal to the 50% market value of the car. Some of the lenders may give you’re a higher amount with an interest rate of 36% to 100%.
Repaying the Loan
Once the title loan is approved, the lender will provide you a cheque or cash in hand. There are slight differences in how the borrower pays the installment. Some states don’t allow balloon system to repay the loan. It means you can pay the installment in equal portion per month or week. The payment schedule is set during the time of taking the loan. In most of the cases, the borrower has to repay the interest in due time and at the end repay the loan amount in a single payment. The question is what if he or she can’t repay the loan in time.
In most of the cases, they get a chance to roll over the balance for a new title loan. But there is a certain limit imposed by the State Government on how many times one can roll over the loan. In case, the borrower is totally unable to repay the loan, the lender will try to take possession of the car and sell it to get their money back. But this is the last resort they will think about as it takes a lot of time to take the possession of the car and sell it to others. Moreover, the court may give 30 days to the borrower to repay the loan to recover the car title.
Important Things to Keep in Mind While Taking Title Loan
Though it may seem a very easy task to get a title loan, the borrower must consider following important things before taking it.
Loan Amount and Duration
In most of the states, the borrower can get a loan up to $4000 depending on the car’s value. The lender will assess the market value of the car and few other factors to provide you the loan. As it is a short time loan, and the lenders are not considering your credit history, they will consider it as a risky loan and implement a high-interest rate. If the loan duration is shorter than the interest rate may grow higher. Therefore, the borrower must consider carefully if a title loan is the best option for him or not. If he doesn’t have a regular and considerable income, this loan may provide him a counter result.
Yes, there is an option of roll over the loan, but you have to remember that, you can roll over the loan for a certain number of times decided by your State Government.
While taking the loan, you have to consider carefully the payment schedule the lender is providing you. Because title loan is itself a short term loan in nature, you have to pay the installment in every week for most of the cases. So consider, if you can do that or not. If you can’t tell the lender and try to come to an agreement of bi-weekly or monthly payment, but don’t agree on a schedule that is not useful for you.
Lien-free Car Title
Make sure to keep a document that proves your car is a lien-free one, and you have bought it with full payment. Unless you have a proper document, your loan will never be approved by any lender. Therefore, it is wise to keep all the necessary documents related to the car with you.
Most of the title loan lenders will ask you if you have car insurance or not, because the car will be in your possession while you take the loan. Unless, you have car insurance and, unfortunately, go through a car accident, your car’s value will decrease. That is not an acceptable option for most of the lenders.
Fortunately, if that the case, there are few lenders don’t require you to have a car insurance. You can also get a loan from there.
Regulations Related to Title Loan
Different states have different rules and regulations regarding title loan. Some of the states even consider it as illegal. Therefore, the borrower must know that state rules and regulation regarding this loan. Few of the common regulations of California are:
- One can charge maximum $75 per loan processing for an amount of up to $5000.
- Loan should be fully amortized
- The borrower must show that he or she can pay.
- In Illinois following regulations are followed:
- You can get a loan of maximum $4000
- A balloon payment is prohibited. Borrowers can repay the loan with equal payment.
- Loans that require paying an installment equal or more than 50% of borrower’s gross monthly income are prohibited.
If Taking Title Loan is a Wise Decision
You can understand that you have to pay a high interest rate if you take a title loan. Therefore, you may get worried if it is wise to take the loan or not. The key factor that you should consider in that case is – if your monthly income is enough to repay the installment or not.
The next thing to consider is how urgently you need the money. If it is an urgent time to get some money, title loan can be proved very useful in that case/ you can get the money within a short time and can solve the urgent matters first. Then you can repay the regular installment of the loan.
When you are looking for a lender to get a title loan, you will get numbers of options online and offline. As a result, you may get confused to pick the right one. While choosing the lender, the best option is to look in online. You can find all the policies regarding the loan and can have a look at other borrowers’ reviews to determine if the lender is co-operative or not. Moreover, you can compare the offers from different lenders and their interest rate. Make sure to look at the installment amount as well and think if the amount is affordable to you or not. Again, processing a loan is quicker and importantly has all the documents on record. You just have to go to the lender once the loan is approved. This way, both the time and the effort to get a title loan will be reduced.
Remember, you may be the borrower, but you are a client for the lenders, and they are making a profit by lending you money. Therefore, don’t feel hesitant and read every policy they have before taking a loan.
At present, you can easily get a title loan from online. You just have to get the cash or check in hand. Everything else can be processed via online. It means there is no hassle to get a car loan as long as you have a valid car title registered to your name. Moreover, you get to drive your car whenever you want. Therefore, you can always consider title loan as a good option when you need to short time money.