1: Find out what type of payment options are available
It’s important to know how a car title loan lender will take the payments from you. Will they come straight from your paycheck or will you pay the company directly? You’ll also want to know how many months your contract will run. Like other types of loans, the longer it takes to pay off your loan the less you will pay each month. The downside is that you will pay more each month in finance charges and it will take longer to settle the full amount due. Do all you can to make sure your car title loan is outstanding for the least amount of time as possible.
2: Know what the online application & approval process is before you apply
Much like some of the other tips here, this is more to save you time more than anything else. Some lenders will allow applicants to complete the title loan application completely online. Others will require you to do an online application and complete a phone verification as well. Most companies that offer online title loans will be able to verify your application in 20 minutes or less but some can take longer. On top of this, you’ll want to know whether your lender requires a visual inspection of your car. Oftentimes this is done when you pick up your check.
3: Be sure you know how long it will take to get your cash
It can take anywhere from a few minutes to a matter of days to have cash in hand from your online title loan. Does your online lender have a local physical branch? If so, you can fill out the application online. This will enable you to pick up cash at that same location. Also, some companies will send the cash straight to your bank account. If they do this make sure you find out how much they’re charging to start the bank ACH. It pays to understand the process of handing over the pink slip. Each lender is different and they may require specific paperwork besides to your vehicle title. Each state has rules to follow when changing vehicle ownership or adding a lienholder to the pink slip. You can read all about what is required in California when you change ownership on a vehicle’s title.
4: Ask the lender what type of car they accept
You’ll want to do this before you fill out the online application and go through the process of getting qualified. Most lenders will accept vehicles that are newer than 2000. Some will allow vehicles that are from 1995 or sooner. The mileage on your car can be an issue as well. Ask your lender what their mileage restrictions are if your car has a mileage over 100k. Make sure your vehicle has enough equity. With that, there should be no issues when it comes to getting funded within a few hours.
5. Make sure you can keep driving your car
Did you know some car equity lenders will require you to impound your car with them for the life of your loan? Some online lenders will also install a tracking device on your car. This means they will also know where you are while driving the vehicle. We’re seeing less of this as car title loans are becoming more and more common. Be sure you get to keep your car while you’re paying your note off!
6. Know how much it’s going to cost you
Sounds simple enough, but many consumers fail to ask how much their financial transaction will cost them. Did you know that some online lenders will charge half of what many of the largest companies charge? Since you’re using a vehicle as collateral, the interest should not be as high as a cash advance or installment loan. Don’t be hesitant to shop around for the best interest rate. Also, check your contract for extra fees or charges that you’re not familiar with.
7: Be sure the lender is licensed to lend in your state
You won’t be able to get a loan if your lender is not licensed to offer online title loans in your state! It’s that simple. Each state has requirements that an online car title loan lender must meet to be registered. If a lender is not registered in your state they’re not going to offer you a vehicle equity loan. This is more common than you’d think. Many of the largest companies that fund online car title loans can only fund loans in a handful of states. Check your state’s eligibility before you submit an application. This also applies to retail lenders. Even though they may have a physical office in your state you will still want to see if they’re licensed.
8: Ask your lender if they charge a pre-payment penalty
The interest clocks start running the day you get cash for using your vehicle’s collateral. Because of that, you’ll want to make it a goal to pay off the entire amount before it comes due. If you’re able to do this you can eliminate interest charges that you’ll be hit with for the life of the loan. The only way this works though is if you’re not charged a pre-payment penalty. Most firms will not charge a pre-payment penalty for early payoff, but some still do. Be sure to verify whether your lender has a penalty before you sign off on any car title loans!