An auto title loan is a secured loan where you give your car as collateral to get a loan. These loans offer you a quick way to get between $100 and $10,000 and sometimes more based on the value of your car and the auto loan company you use. Most companies will give you a loan of between 1 and 40 percent the value of your vehicle.
The main advantages of these loans is that they are easy to apply and their approval process takes less than thirty minutes, and you have a loan. But, you might lose your car, if you fail to repay your loan in time.
The laws and practices that govern auto title loan vary from one state to the next, but there are practices common in all states. First auto title lenders are not concerned with your credit score, and neither are they interested in your income. The lender will, however, require that you own the car outright in order for you to qualify for at least 40 percent of the value of your car.
In most cases, you’ll be asked to leave a key of your vehicle or install a remote immobilizer or a tracker to allow repossession in case you fail to pay your loan. If you can pay your loan in time, you are not in any problem with the lender.
Most secured loans are designed for people who need a large amount of money, either to buy property or start a large project. Car loans are for individuals who need quick cash to repay in a month or two. This type of loans are offered with a high-interest rate, going up to 30 percent from some lenders – this is why you should choose your lender very carefully.
Unlike when you are applying for mortgage or bank loans, an auto title loan takes a few minutes to approve. All you have to do is prove the right of car ownership and that the car is lien-free and you will have your loan. All the lender will do is value your car and calculate the maximum loan amount.
If you’re in need of a quick $5000 to take care of some urgent bills and current credit cannot help, you can use auto title loans. However, you need to know that most of these loans are needed in a month’s time, and you must be willing to work harder to repay the loan. If you can pay within the first month, you can go ahead and apply for it.
If you cannot pay within the first month, your loan is ‘rolled over,’ and you will have to pay interest on the new amount. If this continues for a year or so, you will have gotten into a debt cycle.
For you to get a good deal off your car title, ensure you get the best dealer. You can do so by checking out Top Loan Companies and comparing different companies. Check the reputation of a company based on user reviews, interests charged and the loan application process before picking a company.