The Ultimate Cheat Sheet On car title loans
Going for a loan is one of the easiest ways of getting cash. And with the way traditional forms of loaning system are set-up, getting a loan virtually overnight is nearly impossible. Well, there is a perfect solution to your financial woes, but it might cost you, it’s known as car title loans.
You might have seen ads on the internet like ‘Need quick cash,’ ‘do you feel left out by the banking sector’ we’ve all probably seen various banking agencies advertising car title loans as the perfect answer.
Don’t be too quick to join the bandwagon; you don’t want to be in a situation whereby you take out a loan without understanding what it is in the first place. Sure, it’s quick and convenient, but they can be quite risky.
In this article, we are going to have an in-depth discussion and conversation about automobile title loans. So, go through it so you can borrow with confidence.
What are car title loans?
A car title is a secured loan whereby a borrow using his/her car title as collateral to get a loan. To get this type of loan, one has to meet the minimum conditions and also submit basic documents.
The amount that you will be awarded is based on the condition of the car and market value. Once the full loan amount is repaid, the lien is removed, and the vehicle can now be finally returned to you.
In case the lender is not able to pay back the agreed loan amount, the lending agency has all the right to auction off the car. Most of these loans are flexible and can be repaid over an extended period giving its consumers sufficient time to pay their loan fully.
How do auto title loans work?
These types of loans are processed in a fast and efficient way; we always recommend to go for a lending agency that offers professional and expert services to get the best deal possible.
To qualify for a loan, the most vital thing to do is to apply for a car title loan with your name on the car title if the title of the vehicle is in your name, its sufficient proof enough to show that you are the owner of the car.
The next process s the car inspection phase. This is usually to ascertain whether it’s enough to stand in for the amount you would like to borrow. On most occasions, the value of your car should be worth at least two times the amount you want to borrow.
The mileage of the vehicle is determined using the odometer to determine its worthiness. The picture of the car is also taken; the resale value of your car is also calculated using Kelley Blue Book (KBB).
Inlay man’s term, automobile title loans are the same as payday loans, but in large amounts. The average amount of car title loans is $1,000.
For example, if you take atitle car loan that’s 50% or more value of your vehicle, you stand a significant chance of losing your car in the long run, which can be considered quite risky in the long term.
The title loans are independent of your credit score
The easy title loans come with a lot of benefits. Because you’ll be putting your car as collateral, you can get your loans fast and quickly without credit checks. In this case, the lender won’t care about how risky it is to the borrower.
If you default on the payment, they will auction off your car. It a win-win for them either way, which means you can have the worst credit score, but still, you are eligible for a loan, and you’ll encounter little trouble.
To make it even better, the loans are processed very fast. You can apply either in person or online title loans and get the cash the same day. These factors make the title loans an effective solution to all of your money problems.
Auto-loans are considered short term
Typically, auto loans last about a month, which means if you’ll not be able to cover it within a short period, then it’s not the best option financial wise.
These loans are suited to those who have a steady stream of income or have well-paying jobs. It’s a bad idea to take out such loans if you are unemployed or don’t have money. Be warned it’s a recipe for disaster.
Title loans come with high fees and interest rates
The bad news is, financing these loans is quite expensive. Most lenders charge loans with an interest rate of over 25%, which roughly translates to an APR of approximately 300%, I know its bonkers crazy, but that’s the price you pay for all the convenience.
Most lenders operate differently, and you’ll find out the interest rates differ from one agency to another even though they are regulated and supervised. For example, if you take a title loan of$1,000 loan, you’ll incur almost $1,500 in fees and interest.
If you can repay the agreed amount at the end of the month, you can negotiate with your lender to roll over the loan into a new loan that lasts an additional one month. This will give you some much-needed time to pay back the total loan amount in full.
However, note that rolling over your current loans comes with additional fees and increased interest rates. So, it’s worth remembering that nobody wants to get stuck in a hole they can’t get themselves out of.
How can you apply for a car title loan?
Applying for an auto title loan is a simple and straightforward process; all you need to do is walk through any of the loaning agencies near you and get a cash loan against your car title.
For those who love convenience from the comfort of their homes, you can no apply for car title loans entirely online by filling out an application form. There is also a third option; consumers can now make an application over the phone by talking to a loan representative.
The lending agency will also provide you with a repayment plan that works and is convenient for you.
Your vehicle will be used as collateral for your secured loan; the inspection phase is vital as it ensures you receive the full amount of your car’s value. It also may reveal your vehicle is worth much more, thus allowing you to apply for more funds.
The inspection process will also show the general condition of your car and reveal any bumps or dents, scratches, broken headlights, scratches, and so many more. It will also determine if your vehicle has undergone somebody’s works.
If your car has been in an accident, the inspection will reveal that. With regards to body modification, the inspection will outline the specs and codes. All of this information will be outlined during the inspection process.
The representative from the lending agency will check the roadworthiness of your car if your car has an active insurance policy and proof of ownership.
Easy title loans without inspection
The essence of your loan inspection is to maximize your car’s worth to get more money. You may think your car is not worth much, and you’ll apply for a lower amount, but vehicle inspection will fix that.
In some instances, you can acquire title car loans without a vehicle inspection. Some clients may prefer to skip this phase not because they don’t own a car but because of other reasons like:
- They have a strict schedule; they might not have the time to drive to an inspection process and wait for the outcome
- The inspection location might be quite far making it not convenient for them
- Other don’t like the idea of dealing with the lending agency directly
- The vehicle might be unavailable for various reasons. It might be at the mechanic, in an impound lot. The borrower most likely will not have access to his/her car.
What the inspection process entails
Auto-title loans entail providing pictures of the car to show the general body condition of the vehicle. But the physical inspection is carried out by the representative of the lender, which ensures that the collateral is in perfect condition to stand against the loan.
Even though your vehicle might be old, as long as it’s roadworthy, you are eligible to get the best title loans.
A vehicle that is in top condition and has never been in an accident will get a high loan amount while a car involved in plenty of accidents will get a lower or no cash at all.
To ensure that your car is eligible for a title loan application, its recommended always to do the following:
- Adhere to all traffic laws and drive safely ensuring your car is free and safe from all accidents
- Routine Care and maintenance of your vehicle keeping it in tip-top condition
- Avoid situations that will damage your car, such as drunk driving or over speeding.
Refinancing of car title loans
Refinancing is beneficial to borrowers as they can enjoy better deals against their car titles tied to unfair loan agreements. Some of the key reasons why borrowers refinance auto loans are because
- They want to reduce their monthly payments
- Obtain a low-interest rate
It’s allowed to refinance your car if you are not comfortable with your lender.
How refinancing works
The refinancing process is just the same as the car title loan application. You must provide vital information as well as answer a few questions to the lending agency.
In simple terms, here is how it works:
- Fill out a refinancing application form whether online title loans or via phone
- Providing details on your existing loan. Then there is verification of the current loan by the title loan officer and the lienholder of your vehicle
- Complete the new refinancing application with a new lending agency to determine the amount you’ll save each month with the new deal
- Provide all the relevant documents and extra requirements that will be needed by the new title loan agency
- A car inspection is done to ascertain the value of your car and your ability to repay
- Paying off the previous loan and approval of the new title loan
Now that we have extensively discussed title car loans and we have a proper understanding of how they work, you can now decide on your own whether it’s the right fit for you. Title loans are a perfect option when you need quick cash, but it also comes with its fair share of risks.
So, we advise you to cover all the basics before deciding on which one to take. Cheers!