What to Know About Car Title Loans and How It Works
Get to know what a car title loan is and how it works.
NEW YORK, NEW YORK, UNITED STATES, July 25, 2021 /EINPresswire.com/ – Need money quickly to pay rent, bills or deal with emergencies? Then an auto title loan could be the answer to your money problems.
A car title loan is a short term loan where the borrower uses the title of his car, truck, motorcycle, semi-truck or other vehicle as collateral. Simply put, a car title loan is where a borrower gives the lender title to their vehicle in exchange for quick funds. Just like payday loans, car title loans usually last for 15 to 30 days, and you can get up to $ 10,000 to deal with any unforeseen emergency you might have.
Car title loans are attractive because they are quick, don’t require a credit check, have less paperwork, and you can get the money in under an hour by entering the lender’s store. All you have to do is take your car to the lender, get their approval for the loan, give the lender title to your vehicle, get the money, and pay off the loan on the due date. ‘deadline. But before you apply for an auto title loan, you need to make sure that your vehicle is clean, free from payment, and in good repair. A vehicle with past due payments or repair problems will reduce your chances of getting the loan.
The exact amount you get from a car title loan is based on the current market value of the vehicle used as collateral. And the loan limit is usually between 25% and 50% of the current market value of your vehicle.
Before getting an auto title loan, you should know that there are two types of auto title loans – and which one you get depends on the agreement between you and the lender. The types of auto title loans available to you are:
1. Single Payment Loans: This auto title loan requires you to repay the money owed, including the 25% monthly finance charge (interest rate) and other charges, all at once after 30 days. Multiple payments are not accepted in this type of auto title loan, and borrowers have to pay it all off in one large sum or risk losing their vehicle.
2. Installment loans: This auto title loan allows you to make several installments spread over 3 to 6 months. Most installment loans also have an annual percentage rate (APR) that tells you how much it costs to borrow money for a year. The APR is based on:
• The amount borrowed
• Monthly interest rate
• Term of the loan
• And how much you pay for the additional costs.
How it works
Getting a car title loan is very easy, as lenders don’t care about proof of your income source or your credit score. They only need your car and a few documents to show that you are who you are and that you own the car. Your application can be completed on the lender’s website, but you will need to bring your car to the lender’s physical store for document verification and vehicle inspection.
Here’s how an auto title loan works:
Step 1: You complete the application form online or in the lender’s physical store.
Step 2: You show the lender your car and other necessary documents like your photo ID and proof of your car title, auto insurance, and driver’s license.
Step 3: The lender checks the condition of the vehicle, confirms the documents and approves the loan.
Step 4: You get the money and he keeps your car title
Step 5: You pay off the loan plus interest after 30 days and get title back to your car.
Additionally, a lender may also require a borrower to install a GPS tracker or device that turns off a car’s ignition in the vehicle in the event of a potential repossession. This extra detail is put in place to protect the interest of the lender as there is an above average risk of default with this short term loan.
A real life example of how to get a car title loan
Travis is strapped for cash and cannot afford his daughter’s medical bills. He decides to borrow money from a lender using his vehicle as collateral for an auto title loan. He gives the lender the necessary documentation and he obtains a loan of up to 50% depending on the current market value of his vehicle. He reimburses after 30 days and recovers the title of his vehicle again.
How to find a trusted lender
If you are looking for a place to find a trusted lender, we suggest you give 212Pawn a try. 212Pawn is a research site that gives you access to the best lenders in your area. All you have to do is enter your vehicle details and they will put you in touch with the best lenders.
Now that you know how an auto title loan works, why not apply for one and take care of your emergencies!