Saving can be difficult. With the hard economic times, putting some money aside can be a challenge no matter how much you try.
The lack of savings, however, makes it practically impossible to handle emergencies when they pop up. Borrowing or selling personal stuff, therefore, remains the best and only option when faced with an emergency requiring quick cash.
Quick facts about title loans
Car title loans are short-term loans offered by some loan companies on the premise that you put up your vehicle as collateral. You can apply for these loans online or at the physical office of the lending firm.
Unlike traditional loans, you don’t need a perfect credit score to be eligible for these loans. Lenders in most cases are interested in your capacity to pay more than your credit history. They, therefore, don’t perform credit checks making it quite easy and fast to be approved for a loan. In fact, you may be approved for a loan on the same day.
The amount you can borrow largely depends on the value of your vehicle. Lenders usually offer loans from 25% to 50% of your car’s value. These loans range from $100 to $5500 but some lenders offer up to $10,000 or more.
Online title loans are very expensive with triple digits interest rates and APR. They are more or less the same as payday loans and lenders require that you repay your loans within 15 or 30 days. This may not be possible for an average borrower who depends on his paycheck to get by. It then forces them to be late on repayments or rollover their loans which attract penalties trapping them in more debt.
To be eligible, you’ll have to fill out an online application form just like any other loans and offer your vehicle title as part of the required documentation.
Some lenders will require that you own the car or at least have equity on the vehicle for your loan application to be approved. The vehicle title remains in the custody of the lender until that time when you have fully repaid your loan.
Eligibility criteria for online title loans
To complete the loan process for auto title loans, you’ll need:
To produce a photo I.D as proof of residency.
Proof of income whether from business or employment.
Your clear vehicle title.
Clear contact details.
An active bank account.
Some lenders may require that you produce duplicate keys of your car.
Benefits of car title loans
Although they’ve been criticized, online title loans may offer the much-needed relief when you are in a financial crisis. For individuals with poor credit scores, these loans may be the only option.
Unlike conventional lenders who’ll take forever to approve your loan request, you can get approved for a loan quickly. You’ll also receive your funds on the same day to handle that pressing need.
A title loan is the most expensive form of credit. With the high interest rate and APR, it’s highly likely that an average borrower will default on monthly payments.
On average, most lenders will charge an interest rate of 25% per month to finance the loan. This is equivalent to an APR of at least 300% and it could be higher depending on other additional charges that the lender may require. It, therefore, means that if you take out a loan of say $500, you’ll be charged on average $125 as interest. So in 30 days of taking out the loan, you’ll pay back $625 (that is $125 plus the principal $500) where does that leave you?
You risk losing your car and only means of transport because you may fail to repay the loan. The lender will then sell off your vehicle to recover his money.
What to look out for in title loan lenders
The loan market is awashed with lenders giving borrowers freedom to choose who is affordable, has flexible repayments, and offers better terms. Online borrowing has also increased the ease of application, a fast approval process and offers an alternative to traditional loans.
It’s, however, important to work with a reputable lender and not just any lender who can offer you funding. These are some of the things to look out for:
Here’s a checklist of the things that you have to consider:
Does the lender have a solid online presence?
When choosing an online title lender, ensure that they have a website explaining how their business operates, their physical offices and their customer reviews. Most online lenders are scammers, and if you suspect anything fishy, it’s better to walk out. Also, ensure that the lender is licensed to offer loans in your state.
Does the lender have a solid online presence?
Read and examine the terms and conditions. It is very crucial for you to find a lender that can give you clear details pertaining to the terms and conditions of the loan. Some lenders may have hidden fees and unclear costs that will make your borrowing much more expensive.
Are they clear with information regarding their loans?
A good lender will ensure you understand your options before signing the loan agreement form. Let your lender explain to you how much your loan will cost, the APR, the terms and every other question you may need to be answered regarding your loan.You are not obliged to sign any loan agreement form until you are completely satisfied.
A good lender will explain to you your responsibility
Apart from offering you money, a good lender cares about your financial stability. The lender should explain to you the processes involved and the consequences of defaulting. He could also suggest other alternatives based on your current financial status.
Work with a lender who takes your privacy seriously and will not sell your information to the unaffiliated third party.
Do you need help finding reputable lenders? We can help make your funding needs easier. Fill out our online loan application form today and get connected to reputable lenders who’ll not only offer you money but will help you gain your financial stability.