If you are thinking about taking out a car title loan, you are most likely facing some kind of a financial emergency that needs to get taken care of as soon as possible. It’s an uncomfortable place to be in and can put a strain on many facts of your personal and professional life.
What’s important to remember is that just because you are looking to take care of your financial crisis with some kind of fast cash loan as quickly as possible, doesn’t mean that you should simply jump at the first opportunity you come across that can get you the money you need.
So, what is a car title loan, and what are the factors to look out for when you are applying for one.
First, let’s break down the simple facts of car title loans. Car title loans are known as short-term loans that can get your out of a financial bind fast. The reason why speed is such a strength when it comes to title loans is because the vast majority of car title lenders do not require credit score checks.
That means that you can get a car title loan regardless of a spotty, or non-existent borrowing history. If your car meets the criteria, you could end up with a loan from a few hundred dollars to over $10,000. It’s all about how much value your vehicle holds.
The reason why no credit check is required when it comes to car title loans is because they are secured loans based off of the value of a vehicle. That means that in order to take out a car title loan, you need to own a vehicle in full and have a lien-free title with your name on it.
Lenders are typically going to want to see some other documents, such as proof of income, a government issued ID, and several others, but flexibility is possible as long as you have the car that you will be using as collateral in your secured personal loan.
One you take out a title loan, you will be expected to pay back the loan – plus any interest charges your accrue – by the end of your payment term. It is quite common for payment terms of title loans to be as short as two weeks to a month. That means that you’re going to want to get the money you need to pay off your loan as soon as you can as to not risk facing increased interest rates.
Paying interest rates is one thing, but the absolute worst thing that can happen when you take out a title loan is that you end up defaulting on your loan. In that case, because car title loans are secured loans, your lender will have the option of repossessing your car to make up for the money they lost by lending to you.
It’s a nasty outcome and one you obviously want to avoid at all costs.
Keeping the rewards and risks of title loans, what are some factors of title lenders that you might be thinking about applying to that you want to keep in mind? The vast majority of them are very straight forward.
Interest Rates
Before you put pen to paper, make sure that you know exactly what you will be on the hook for in terms of interest rates and charges. Interest rates essentially mean how much you will have to pay to take out the loan. If an interest rate for an $1,000 loan is 10 percent, you will have to pay 10 percent - or $100 – to close out the loan and have it be paid in full.
For title loans, interest rates can be quite high because the financial risk that the lender is taking is also quite high. That means rates are known to go up to 25 percent. So, if you take out that same $1,000 loan, you will have to pay an extra $250 to pay the loan off in full.
Because of that, it’s crucial to get the lowest interest rate possible. Think about reaching out to several title lenders and comparing what their loan amount offer is and what the connected interest rate is.
Flexibility with Payment Term
If you feel that you can pay off your loan in full within the aforementioned payment term of two weeks to a month, great! More power to you! If not, you’re going to want to be sure that you can get the flexibility you need to pay off the loan you have without facing the pressure of possible default.
Speak to your lender about a potentially longer payment term, or if necessary, rolling over payment terms in order to get the time you need to raise the money you need to pay off your loan.
Simply ask title lenders you are interested in borrowing from what their repayment term limits are and if there is any way to extend. If you can get that written in your contract, you can feel a lot more secure in your ability to repay .
Consider Customer Testimonials
This is a great way to make sure that you are dealing with one of the more respected and reputable lenders in your area. Do some online searching and see what previous customers have to say about working with a given title lender. If the reviews and testimonials are all positive, you can feel confident about your going into business with them.
If it seems, on the other hand, that a lot of previous customers have had less-than-positive experiences with a given company, it is probably within your best interest to steer clear. Of course, you have to go with your gut ultimately, but there is nothing wrong with using the experience of others to help form an opinion of your own.
Now that you know some of the most important factors to consider when looking to title lenders, it’s time for you to kuse the new tips you have learned and find the right lender for you to get the money you need!
