Expert view by Maggie Gallagher
How do Title Loans work?

Car Title loans

An Auto title loan can be a good idea in certain situations when you need extra bucks in hand.  No credit check. Fast, safe, and easy. A car title loan may be the best lending option if you plan to keep the title loan for less than two months and plan to borrow less than half of your monthly salary. The perfect case is when you plan to pay a car title loan in less than a month. Be aware, that a car title loan will put your car at risk: you may lose your transportation.

What is a title loan? What is a title pawn?

A title lоаn is a type of ѕесurеd lоаn.  The lender has your car as collateral. That’s why it is often called a car title loan. To be honest, not only a car, but every type of vehicle may be used, including motorcycles or even RVs.

How do title loans work?

To get a car title loan, you must be 18 or older and own a vehicle. Be ready to let your vehicle be inspected in order to estimate the value of your car, after that you could be given the value of the car. It is up to you whether to borrow the entire amount or just some of it. In simpler terms, signing the contract you have to provide the lender with your car title in exchange for cash.

The majority of car title loan lenders provide car loans in the range of $1,000 to $10,000. This amount is typically equal to 50% of the car’s value.  A car title pawn is expected to be paid back over a month. Depending on the lender terms are various; you will only know yours once the request will be approved. The main requirement is to have a clear car title without any liens.

What is required to qualify for an Auto Title Loan?

Essential documents required for the car loan include:

  • Free and clear title for your vehicle
  • A steady source of income
  • Address proof
  • Photo ID

Title loan max interest rate

As a rule, loan lenders are allowed to charge 25% interest a month. Not much, but consider, that it means about 300% APR a year. Some states have no limit on the annual percentage rate that title loan companies can charge. Other stares constantly struggle for stricter regulation. Take into account that title loans are not available in all states.

How to get a title loan? Car title loan process

If you ready to apply just start the process online. It is very simple. Fill in an online form and submit it via the lender’s website.

Be aware, that lenders will also often charge additional fees, as document or processing fee. So that the final cost of the loan will be increased up to $50. Make sure to read the terms before signing any document.

  1. Enter your vehicle’s details to see how much cash you can get.
  2. Such information as the estimated mileage, year, style, and model of your vehicle is required.
  3. Provide some personal information so that the lender could contact you.
  4. Submit an application.
  5. After a title loan representative calls back you will be expected to fax a copy of your title and verification of income.

Approval won’t take more than one day, depending on the company, state, and, of course, borrower’s personal information, so it won’t take long to have to cash deposited into your bank account.

How to get out of your car title loan?

You can talk to your lender about rolling your negative equity balance into a new car lease. If you can't get approved for a refinanced loan and unable to simply pay your loan off normally - you may, unfortunately, lose the car.

Contact your lender to discuss the options available, if you have enough cash in your bank account and ready to cut down on monthly expenses

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