One mistake we often make with our visitors is to assume they know what a title loan is and how they work. Most borrowers know the basics about short term loans, but they always know you need a paid-off vehicle to qualify for a title loan. They initially end up at our page that features information about online title loans. But first, they need an answer to their basic question of “how this type of title loan works”. In this post we’ll get down to the basics and answer a question that we’re seeing more and more often lately, “how exactly does a title loan work and what does it take to get one”?
How do title loans work & where to apply
You will often see different definitions for the question of, “what is a title loan”. In fact, there’s no specific industry definition that we can call in when people ask this question. To keep it simple, a vehicle equity loan is a way to get cash by using your car title as collateral. There are many variations of online title loans, but they all come back to that simple definition. When using a vehicle as collateral, you can borrow more money than what you would expect to get with an online payday loan or even a signature loan. You will also see less emphasis being placed on your credit score and or credit history. The reason being, you’re putting your auto up as collateral for the money you receive. Say you get an online car title loan for $10,000. Most car title lenders will let you borrow about 60% of the car’s value. This way 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 an online 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 principle that you can expect with a loan. Most title loans will 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 online 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!
What type of credit score do I need to get approved for a 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. Also, this type of financing is never seen as cheap. 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.
Online 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. We get the following question all the time, “Can I have more than one title loan at a given time”, and the answer is that it depends. There will often be multiple companies that want to give money for a vehicle title, 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 with a vehicle title loan and what the credit 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!
How much money can I get with a car 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 title loan 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 does the process work to get cash from a direct lender
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 online title loan companies 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 that offers online title loans. Don’t overthink it, there are dozens of loan providers in our directory that are looking to provide emergency cash!