Online Car Title Loans – All loans are risky if not repaid on time. However, if you fail to meet your payment obligations, a car title loan has a particularly problematic consequence: the lender may take your car.
Before you consider getting a title loan, consider the potential pitfalls of using your car as collateral to borrow money.
What is a Title Loan?
An online car title loan allows you to borrow anywhere from 25 percent to 50 percent of the value of your car, in exchange for which the lender will title your car as collateral.
These short-term loans usually last for 15 to 30 days. In many cases, to get a loan, you need to keep your car straight. There are some lenders who will offer this type of loan when your car is almost paid off, but this is less common.
How it works:
Online Car Title Loans, Suppose you have a car worth $ 5,000, and you find yourself in an emergency and you need $ 1,000. A title loan lets you borrow the opposite of your car, so you can get 1,000 faster. Just as a mortgage uses your home as collateral, a title loan uses your car as collateral.
B. McClary, vice president of communications at the National Foundation for Credit Counseling, said: “One of the main things people need to understand about title loans is to use your car’s equity to balance your borrowed money.”
Although the word car may be in the name of the product, these loans may also be available for motorcycles, boats, and recreational vehicles.
To get your car title back, the lender must repay the loan in full, including the charges levied by the lender.
How do title loans work?
online car title loans come in two different types. Some single repayment loans mean that the borrower has to repay the entire amount of the loan and the interest rate charges within one month.
Installment loans, with equally high APR, can be repaid within three or six months, depending on the lender.
Fees related to a car title loan are not cheap. They typically include an average monthly finance fee of 25 percent, which translates into a faster APR of 300 percent. On a $ 1,000 loan, if the loan is repaid in just 30 days, you will pay an additional $ 250 interest.
If you delay your payment and the interest charges accrue, the cost of the loan may be much higher than the initial sticker price.
Title loans often carry hundreds of dollars as well as additional fees such as processing, documentation, and loan origin fees. In some cases, you may need to get and pay for a roadside service plan for your vehicle.
When applying for a car title loan, be prepared to show the lender a clear title, proof of insurance, and a photo ID. Some lenders ask for a second set of keys.
Although title loans can be easy to obtain, the benefits come with serious costs and risks, according to Graciela Auntie-Diaz, director of federal publicity at the responsible lending center.
Some car title lenders install a GPS device – nicknamed ‘Switch’ – which can prevent the borrower’s car from starting, using this practice to make it easier to get a loan or have the car confiscated. Work, doctors, and elsewhere In addition to being the primary means of transportation, a car is often the biggest financial asset of a person. The impending danger of losing your car is to keep it light.
Do I need documents for an online car title loan?
Online Car Title Loans – In addition to using your car title as collateral, a loan agent will ask you to submit your information and some documents to verify car ownership.
Although it may take more time and effort to recover these documents, you may already have them! Although for most loan options you traditionally have to submit these documents by post or in-person to an actual address, this can be inconvenient if you need money!
You May Also Like: What Is A Conforming Loan Limits And How It Work?
Here is a list of the following documents that you can submit in various ways:
Car Title: When inquiring about an auto title loan, a loan agent will ask you to submit a car title that must be in your name. If your name is not in the title or you have lost it, a LoanMart representative can help you determine how to request or transfer a transfer. You will also need to send some pictures of your car to verify its condition. Take clear pictures of the front, rear, and side of the vehicle as well as its odometer readings and vehicle identification number (VIN).
Proof of Income: As long as you can pay your dues, you do not need to be actively employed to qualify for a title loan. Income, SSI income reward letter, job letter from your employer, or any other alternative income form.
Proof of Address: To prove your residence to a loan agent, you can use various documents to do this: Recent Utility Bills, CreditsCard statements, mortgage / rental agreements, recent phone bills, etc.
Proof of Identity: You can verify your identity using a photo ID issued by the government. You can use documents like a driving license, passport, and even a military ID.
Any Reference: The loan agent may ask you to provide a personal or business reference during the approval process for a car title loan.
Alternatives to title loans
With such serious flaws, McCleary recommends reaching out to traditional banks and credit unions to identify less expensive loan options.
Even if you don’t have a bank account, have a low credit score, or have struggled with poor financial decisions in the past, it’s worth checking out all your options.
McCleary rarely recommends adding credit card loans but says they are a better option than title loans. In most cases, the credit card interest will be much lower than what you would pay for a title loan.
What are the benefits of applying for an online car title loan?
Approved for a title loan offered by the various lenders can come with many lucrative benefits that benefit your loan experience. Here’s what you can expect if you are a qualified borrower, with a flexible approval process:
Incredibly Quick Grants: When you search for a title loan online, you can get funds on a business day! Searching for a title loan served can take only 5 minutes Choose to receive your money by direct deposit 24 hours less than other methods.
Competitive Interest Rate: Borrowers searching for a title loan will have to repay the loan amount with interest. competitive interest rate than other loan options.
No Hidden Fees: Many loan options surprise you with hidden fees that can throw you into a debt cycle. there are no hidden fees or balloon payments to worry about. If you decide to repay your loan early, there is no prepayment penalty.
Convenient online process: Quick and easy by making the whole loan process online with a title loan. You can get helpful and reliable customer service with a team dedicated to making your loan experience convenient and hassle-free. ,
The bottom line
If you decide that an online car title loan is your only option, make sure you understand the terms of the loan. Before you sign, title lenders must show you the loan terms in writing, and federal law requires that they be honest and clear about the total cost of the loan. And remember – costs are probably not worth the risk involved.
You May Also Like: How To Avoid Private Mortgage Insurance?