What Is A Title Loan & What To Expect When I Apply

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One mistake we often make with our visitors is assuming they know what a title loan is and how it works. Most borrowers know the basics about short term loans and the definition of car title loans. Some people even understand the difference between unsecured loans but have questions about what happens to their car or how the money is paid back. They initially end up at our site, which features information about collateral loans and the various financing options. In this article, we’ll get down to the basics and answer a question that we see more often lately, “how exactly do car title loans work, and what does it take to get one”?

 

What Is The Definition Of A Car Title Loan

You will often see different answers when someone asks how title loans work. There’s no specific industry definition to turn to when people ask this question. A car title loan is a way to get cash by using your vehicle’s equity as collateral for the loan. There are many variations of these secured loans, but they all come back to that simple definition. When using a vehicle as collateral, you can borrow more money than you would expect with an online payday loan or even a signature loan.

Title loan companies will place less emphasis on your credit score and or credit history. The reason is that you’re putting your auto up as collateral for the money you receive. For example, say you get an online car title loan for $10,000. Most lenders will let you borrow about 60% of the car’s value. If you fall behind, a lender can always repossess your car(based on state regulations)¬†and sell it if you don’t bring the loan current.

 

What’s Required To Get A Car Title Loan

Much like other types of online loans, this form of borrowing requires a few things to be approved. You have the collateral(your car) which will secure the loan, as well as the interest, fees, and monthly payments to expect with a loan. These loans last for a much longer amount of time than a normal payday loan or similar type of short term loan. You can usually work with your lender to come up with a payback time that works for you.

Over the past few years, we’ve seen many people stretch the payback time out longer than they should. Some people are even taking out car title loans for more than three years! While this may lower your monthly payment, it will cause you to pay more interest charges. Make sure the lender has your best interests in mind when you are working on the loan terms!

 

Credit Score Required To Get Approved For A Car Title Loan

Most companies will overlook your bad credit or past bad credit issues. There are specific things they look out for like bankruptcies but for the most part, you don’t need to worry too much if you have bad credit. Title loan lenders know you are securing your car to the pink slip. If you fall behind you run the risk of them taking your car and selling your vehicle at auction. This type of financing is never seen as cheap and in fact, rates for title loans online in Utah and even secured loans in Arizona have very high APR’s . It comes with high-interest rates that are higher than what you would see with a bank loan or even with a normal car loan. Interest rates will be like what you see with an installment or payday loan. The lenders know they are working with someone who may not have been eligible for a traditional loan.

Car title loans should only be taken out if you don’t have any other options. First options should always include credit union financing or even a cash advance on a credit card. If you have good credit you should stick to the normal financing options. There will often be multiple companies that want to give money for a lien free pink slip, but you need to do your homework and research. At this point in the application process, you should know exactly what you’re getting into and what the credit and lending requirements are. Don’t let them stop you from learning about auto title loans! There’s a lot to know before you apply for an online loan!

 

What Is The Loan Amount With A Title Loan

Pro-Tip: Besides asking about the amount of money you can borrow, don’t forget to ask your lender about the fees that come with their auto title loans. Most companies are direct lenders but some are unaffiliated third-party companies. This means you may have to take time to find out the exact name of the actual lender that is financing the pink slip. Have them break down and explain all the fees that are in your contract. If necessary you’ll want to go through the contract line by line to find any fees that they didn’t mention. It’s a red flag if the lender refuses to do this.

Much like when you purchase a vehicle from a legitimate company, there are tips available to walk you through the application process. Some online companies will try to add in fees and charges without you seeing them. Some of these unlicensed firms will try to charge interest rates that are above and beyond what’s allowed. Examples of this include fees to check your credit and loan application fees.

 

How Do Title Loans Work When I Get My Cash

It’s imperative to be sure your lender is licensed and regulated to provide secured title loans. By being a registered lender you can have peace of mind that you will be protected if things go wrong. Also, most lenders are bound by state rules that control the amount you get and when you get it. So you should be able to find out when you can get the money once you qualify. In most cases, you can expect to receive funds from a secured loan within 1 to 2 business days. If you are a California resident that lender needs to provide an active California Finance Lenders Law License. Don’t let charges and bad rates get in the way of you getting funded. Car title loans don’t always come with high charges and fees. Move on if this happens and find another company. Don’t overthink it, there are dozens of loan providers in our directory that are looking to provide emergency cash!