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Title loans are also known as car title loans or auto title loans. This is a secured type of loan where borrowers use vehicle title as a collateral to get a loan. The title is given to the lender for the loan amount. When the loan amount is paid, the car title is returned to their owner. When the borrower is not able to pay back the loan, the lender will repossess the car and sell it to pay off the debt.
Title loans are short term loans and have high interest rates. Due to the title, the lender does not usually consider the credit history. They only check for the condition and the value of the vehicle being used to secure the loan. Lenders of title loans argue that they are right in having their interest rate high due to the risk.
Title loans take a lesser time to acquire. The amount ranges from as low as $100 to $1000. What lenders look out for is a source of regular income to be able to pay back the loan.
What is a title?
In the United States for example, a title or Certificate of Title for vehicles is a legal form that proves that a person or business owns a vehicle. This certificate is issued from the Secretary of States office depending on the state where you purchased the vehicle. Each state has its own process of getting this Certificate of Title. The rules of one state may not apply to the other.
Some of the specifications contained in the certificate includes.
a. Vehicle identification number, the make and the year it was manufactured.
b. The technical information about the vehicle i.e. its gross weight, motive power, purchase price.
c. License plate number
d. The name of the registered owner of the vehicle. The one who possess and uses the vehicle.
e. The name of the one who money is owed to on the vehicle. When money is owed on the vehicle.
Once a vehicle is financed, the title is held by the lender and its only released when the money is paid off. When a car is sold, the title is supposed to be transferred to the new person who now owns the vehicle.
Title loans: getting more out of the title on your vehicle
Title loans are similar to the features of secured loans. The only difference is that secured loans does not specify what to as a collateral but title loans do.
Secured car loans can also be termed as title loans. Title loans derive its name from the fact that the lender demands a certificate of ownership on the vehicle called the title. The borrower has free access to the vehicle when they go in for the title loan.
It is only the certificate that is held with the lender until the money is paid back.
Thus there is cash stored up in the vehicle you may be driving. This loans gives you the opportunity to get more out of it by establishing title loans. Title loans are short-term solutions for short-term needs.
You are expected to pay back as soon as you have the resource to do so. When you pay on time, you incur less interest costs.
Title loans are approved fast. Once you submit the information requested and the lender confirms whether you own the vehicle, you will get the loan as requested for.
The inability to pay will mean you will lose your vehicle permanently. You should be however watchful of the high interest rates. You should look out for title loans from authorized lenders.
To get the best out of your vehicle in taking a title loan you would have to first of all understand the purpose for which you are taking the loan. Title loans make it possible to get money on the equity in the car you own.
Reasons for title loans
When you are in a financial situation such as the loss of a job, or maybe a situation of not being able to pay for rent and school tuition, it can pose a challenge. You will therefore consider taking title loans when you have possibly run out of options.
With title loans , the borrower will present a vehicle of value in exchange for instant cash. Depending on the value of the car, you can get up to $100,000 or as low as $5,000 but the amounts you can get depends on the lender giving the title loans.
Those searching for title loans have to present their vehicle title to the lender. Like other loan types, title loans also have interest that accumulates. Some may charge either high or low interest on their title loans.
Those that give high interest rates give more incentives to the borrower by increasing the time that they have to pay back.
The lenders can be very lenient with title loans for those who are not able to pay back on time. If after this, the borrower still defaults, the company will take the vehicle and put it up for sale or give it to collections. You should however consider your options before deciding on title loans.
You may not receive a large sum and for title loans. There are usually no credit checks. Title loans are chosen by people when they have run out of options.
For title loans , no mater the credit score, you can get a the loan. Since the car is going to be the collateral for the loan, you can negotiate the lender to extend the term of the loan.
Emergencies can also cause those who do not have cash on hand to choose title loans. The unforeseen issues in daily life causes the need for title loans.
The fast processing times makes more people interested in title loans. You will get the funds faster than compared to the other types of loans but you should however pay attention to the terms and conditions that will be stated in the agreement.
Applying for title loans
To qualify for title loans as a borrower, there are no credit checks and thus makes you already qualified for the loan. You still however have to meet the requirements that the lender puts forth for you to get the title loan.
The applicant for the title loan must be 18 years and above, you should have your drivers licence and also a state identification..
The application process does not take too long. You will fill in some basic personal questions about the vehicle and bio information.
When you submit the application, the lender responds in a few minutes. The representatives of the loan company who receives the loan read through and call the applicant back. If there is any clarification needed, that will be done.
If some details are not too clear, they will ask for clarification before any next step is taken in the process.
It takes up to 24 hours to get the funds that you need depending on the loan process of the lender.
When you apply with the traditional banks and credit bureaus, there can be a delay in you receiving the loans because of the processes that they have to go through to verify your identity and finalizing the loans.
This can take weeks and can cause a possible loss to the borrower by the time the loan arrives.
What to bear in mind is that no decision will be a 100% perfect and financial decisions are no exemption. You would only have to choose the right lenders who you feel you can co operate and negotiate adequately with for title loans when you need them.
Who are title loans for?
Lenders who give title loans give title loans give the chance for all to apply. Thus they have both those who have and the have-nots to also apply for a loan. Being low income or high income does not determine who can get the loans.
The major deciding factor for title loans is whether you have a vehicle. This is because that is the basis on which the loan will be given. Without it, the loan will not be possible.
Title loans are short – term loans for those who need emergency cash. Unexpected cost from auto, medical, home does cause people to search for title loans.
They serve as a quick fix for those in need of fast cash to meet emergencies. The lender offers this cash option for those who own vehicles.
The different economic situations can sometimes strap people up and the income levels may not be able to support the extra expenses that come in.
Since title loans are secured with your vehicle, you will make space within your budget for paying back the loan. This is because you know you cannot afford to lose it.
Are title loans safe?
This is a question that boarders on the mind of everyone looking for this kind of loan. Everyone wants safety and do not want to be caught up in any financial stress after taking a loan. Any borrower will therefore ask this legitimate question whether the title loan is a safe option.
Title loans have come under some amount of scrutiny as some people have seen them to be predatory. This is because of the high Annual Percentage Rate and interest rates.
In spite of this, title loans are able to support people cash flow situations and emergencies. Others have found out that paying attention to repaying the loans on time does not make it unsafe to go in for title loans.
Lenders who have a shared responsibility with those who take title loans ensure that borrowers are able to pay back and make it safe for them. This shared responsibility takes some burden off the borrower. Title loans are safe when they are used properly. They definitely have their own risks attached to taking the loans like losing your vehicle. The best practice is not to borrow more than what you can pay.
To also ensure that you are safe when applying for title loans, you should check the reputation of the lender. Some lenders are sadly not concerned about your debt and are not in a position to help you see it improve. You should do your research and check with other parties on the lender you are about to choose before settling on one.
Some guidelines to title loans
Title loans are short-term in nature and the amount you can get depends on the value of the vehicle. Title loans have their own dynamics that govern the way it works.
There are different conditions for different loans and these are what pertain
1. The maximum amount you can get on the loan varies
The amount you get varies because the value of the vehicle you place on changes over time. The actual amount that the lender will get after reselling the collateral vehicle differs.
The lender will therefore factor all this in before they give you the amount. So you may not get the 100% of the amount of your vehicle. Either 50% or 75% of the vehicles resale value.
2. Lenders often give full disclosure of the loan
Lenders giving title loans often ensure that they make a full disclosure on the details of the loan. This will enable the borrower to make the best choice for the loan that they are going in for.
Some lenders despite the fact that they know about full disclosure may not adhere to it. You should beware of such lenders who would not want to come to a good negotiation with you. This is because its very crucial for you to understand the terms and conditions that title loans cover.
3. You should pay off the loan at the end of its term
Title loans are to be paid in one single payment. If at the end of the period you are not able to pay back the title loan, the lender may give you an alternative. You can get the option to roll over the loan. This will mean taking out another title loan to pay for the first.
4. You may lose more than your vehicle
When you are unable to pay back the title loan your vehicle will be repossessed and the lender will also end up not giving you any part of the profit when the vehicle is sold.
5. You will be faced with sky-high interest rates
Title loans have high interest rates. The fees and interest adds up quickly and you can sometimes have triple digits to pay to the lender at the end of the term
The ease of getting title loans
When you have a car and there is the title on it, you can get what is known as title loans. Your cars value can be determined and then a loan advanced to you with your car title as the collateral for the loan. Your car’s value is then determined and the loan given to you.
Car title loans easy your emergency situation by giving you access to cash when you need it critically.
The interest rates are what to be watchful for and it varies from lender to lender. There are several lenders ready to give title loans near you. They advertise their services online for those interested to apply even with imperfect credit.
You may not pay application fees or other additional fees when you apply with some lenders.
Steps to get title loans
• Have your qualifications and find a competent lender
You should be 18yrs old at the time of application and have a regular income that can cater for the loan payments. If you own a car in addition to the above then you qualify for title loans. Search for a reputable title loan lender and go in for your loan.
You can apply at the lenders office or online where applicable. After providing the necessary details, your loan will be processed. The processing does not take a long time.
• Getting approved
After applying you will be contacted by the reps from the loan company after providing your details. The lender will then review the application and will present you a quote on how much you are supposed to get. This quote will be according to the information provided on the application.
• Provide necessary requirements
Requirements for title loans involve taking basic information from those who need the loans. Once you are able to submit the needed information and the loan goes through you can then confidently sign the agreement for the loan.
• Wait for your cash
You then wait for the cash. Title loans can be delivered to you in different ways. You either get cash or a direct bank transfer. There is no restriction on how you can get your loans.
These costly mistakes are to be avoided when looking for title loans.
Before finally settling on title loans, there are some mistakes that you should watch out for so it does not cost you more than expected.
You get a title loan based on the value of your car; usually some lenders give 50% of the value of the vehicle. Hence if you have a car that costs $5,000 you get a loan amount of $2, 500.
The interest rate to be paid is determined by the lender after you have filled out your application. You can still drive your car as you make the payments. Your vehicle is used for the collateral but is not seized from you by the lender.
To avoid costly surprises you should check the reputation of the lender. You should find out whether they can help you as a consumer. You have the option to review about 3 different lenders before choosing.
Reading the contract is also another step you can take to avoid future mistakes. Check for the loan term and any additional fees. This will enable you to avoid surprises when it comes to paying back the loan. Seeking the advice of professionals additionally will also aid you in being informed about the particular lender giving you the title loan.
Without these checks, you may end up in wrong hands and pay more than you have bargained for.
Disadvantages of title loans
– Handing over the ownership of your to another as collateral to get a loan is in itself risky
– You can have high interest rates depending on the lender you are dealing with.
– When you are unable to pay back you stand to lose your vehicle and have more debt. The collection agency will intervene to get the money back on behalf of the lenders.
– Borrowers can also be at risk of paying extra or hidden fees on title loans that they get from lenders.
– The short term of repayment deadline can mean defaulting for borrowers who may not be able to keep to their payments.
Borrowers of title loans therefore have to check for how reputable the lender is before any final decision is made because the value of cars are costly.
Since the recession in America in the past decade, people were struggling to get jobs and also to have cash on them.
People therefore turned to title loans to support their financial situation. Title loans still come in handy to those in need of them. However if you do no not expect an increase in the cash coming in, title loans may not be the best for you.
Those who go in for title loans normally do not have a good credit to borrow from traditional lenders. They have little or no credit and thus their lending options are limited.
Once the title on the vehicle is presented, the credit score is no longer assessed. The equity on the vehicle is what determines the amount that will be given to you.
The ability to get fast cash without credit check is what makes people understandably drawn to title loans as an option.
Many lenders giving title loans make it quick and easy to get. There is less hassle with taking title loans. You can choose title loans when you want a short-term debt that you can manage for a few days.
Disclaimer: All loans offered through this website are subject to credit and underwriting approval. AfterLoans.ca is a lead referral company, not a lender. AfterLoans only works with financial service providers that adhere to Canadian laws and regulations. Our lenders lend from $500-$5,000. Loans amortization is between 6-36 months. APRs range from 19.99% to 55%. The actual APR charged will depend on the lender’s assessment of your credit profile. For example, on a $1000 loan borrowed for 12 months at 29.9%, the monthly payment will be $97.24; with a total repayment, including interest, of $1166.88 There is also lender’s optional loan protection policy. In the event of a missed payment an insufficient funds fee of around 45$ may be charged (dependent on the lender). If you default on your loan payment plan the lender may terminate the plan and the remaining balance will become payable immediately. Our lenders employ fair debt collection practices, but will pursue the payment of Outstanding debts to the full extent that Canadian law allows.