When living on a fixed income or facing financial difficulties, you can be borrow from places like a title car loan company. Such lenders will give you the cash in a way that is fast and relatively drama-free. A title car loan is a short-term, but high-interest loan that requires you to use your car as collateral. If you have a bad credit score and want to take out a loan, consider looking for a car title loan. Most title loan lenders do not check your credit history. Here is how to get quick funding using your car title.
- Application. If you want to apply for a car title loan, ensure that you own a vehicle and have a lien-free car title. However, some lenders can allow you to borrow if you are still paying off a standard auto purchase loan. Visit any car title company, show the lender your car, proof of ownership, and your driver’s license. Your lender will determine the loan terms. Most car title loans often have terms of 15 to 30 days. As such, the lender expects you to pay a lump-sum of the borrowed amount, interest, and any other fees when the loan period expires. Most car title lenders charge a monthly fee of 25% of the loan amount.
- Approval. If the lender approves your loan, you will hand over your car in exchange for the loan. The amount you borrow depends on your vehicle’s value or the equity you have in the vehicle. However, you cannot get a loan equivalent to your car’s total value. Lenders will only loan you an amount they can quickly get back if they have to repossess and sell your vehicle. Most car title companies offer loans for between 25% and 50% of your car’s value. Some lenders may install a GPS tracker on your vehicle to prevent anybody from hiding the car.
- Repayment. Although most lenders want you to make a full payment at the end of the loan period, you can extend the refund by “rolling over” the loan. Instead of making the payment, you take a brand new 30-day loan. However, this is an expensive way to borrow. You will have to pay new loan fees every time you roll over the loan. Some state laws may limit this option.
- Non-repayment. Most people worry about losing their car after taking out a car title loan. The truth is, a lender can only repossess your vehicle if you fail to make the full payment on time. You can also talk to your lender if you cannot raise the amount by the agreed time. However, once repossessed, the lender can sell your car and keep its share of the money. Most lenders keep the total amount of the sale proceeds. They argue that the amount you borrowed was the value of the car in the resell market. As such, ensure you pay your car title loan on time to avoid the risk of losing your asset.
- Total Borrowing Costs. Borrowing costs are high with title loans. Lenders often charge a higher interest rate compared to what you would pay on a credit card. Although state laws limit the interest rates, they are still high. The fees you pay to get a title loan also increase the cost of borrowing. While it is a convenient and fast way to get a loan, car title loans can lead to you repaying several times what you borrowed.
- Alternatives. If you want to explore some alternative methods to secure a loan, consider the following;
- Payday Alternative Loans. Federal credit unions offer this type of loan. Payday alternative loans are similar to car title loans, but you do not require collateral. They provide small amounts but with friendlier terms. The interest rate is around 18%. However, you have to be a member to qualify for a payday alternative loan.
- Personal Loans. These are unsecured loans offered by banks, credit unions, or online lenders. You can qualify for a personal loan even with poor credit, but you have to pay a higher interest rate of about 36%. If you have a good credit history, you can qualify for rates below 10%.
- Friends and Family. You can also ask your close circle of friends and family to lend you some cash. Your friends are not likely to impose an interest on the amount you borrow. You can also work out a friendly repayment schedule.
If you want to use a title loan to get instant cash, you can find reputable auto title loans in Mesa.