Our cars are our trusted partners for transportation, business, leisure and any other activity involving getting from point A to point B.
When we are facing tough times, especially when it comes to finances, our cars not only help us get to banks and lending institutions, they can also be the key to getting the financial solution we are looking for. need so much. We know that our cars are very important vehicles, which is why an auto title loan should not be your first option or your immediate option. However, in situations where you have no other choice, it would be good to know how to handle an auto title loan.
Here, we’ll share some essential information about auto title lending, which you might find useful if the need arises.
What is an auto title loan?
As the name suggests, this is a short term loan that uses your vehicle’s clear title as collateral. The loan amount that you can get can vary depending on the lending institution. Typically, you can borrow between 25% and 50% of the value of your car. Depending on the state or city, loans can range from $ 100 to $ 5,000, but if you apply for a auto title loan in california, you can get a loan amount of up to $ 20,000. Most lenders who offer this type of loan require that you own your vehicle in order for you to qualify. Some lenders may offer this loan even if a car is still in the process of being paid off, but the majority of auto title loan lenders require the car owner to have no debt related to the vehicle.
How an auto title loan works
Based on the above description, you are relinquishing ownership of your car to the lending institution. However, even if you got the loan, you can still use your vehicle. This is an important factor, especially if you use your car for work. There are two types of auto title loans that you can choose from: the one-time payment loan and the the installment loan. If you are confident in your ability to repay immediately, the first option is a good way to pay off your loan. You just need to pay the full loan amount plus interest charges within a month or a period agreed upon with your lender.
The installment loan option gives you time to put money aside for your monthly payments, which can take three to six months, depending on the lender. Still, you need to factor in the interest rate as this is a short term loan meaning that an auto title loan typically has a high Annual Percentage Rate (APR).
Basic requirement for an auto title loan
Now that you have an idea of ââwhat an auto title loan is and how it works, you should also know the basic requirements to get one. Depending on the lender, the following elements requirements are required for an auto title loan application.
- Identification – you can present a government or state issued identity card, driver’s license, or international passport for identification and registration purposes.
- Personal Information – An easy way to provide your personal information is to use an online application, where you will also need to provide your address, date of birth, SSN, and contact details. By filling out the online application form, you save time rather than applying personally to the loan agency.
- Car Information – in most cases you will need to present your car to the lender and provide basic information about your vehicles, such as make, model, year, VIN, and license plate number .
- Car Title – This is an obvious requirement, but it should always be included, especially for the benefit of first-time auto title loan applicants. Typical conditions of lenders may be that the title must be registered in the name of the borrower, must be clean and must be free of any lien.
- Proof of Insurance – You may need to show full vehicle insurance for a particular loan amount, such as a loan of $ 5,000 or more in the State of California.
- Proof of repayment capacity – some lenders will require it, and you can provide any of the following: bank statements, regular pay stubs, or disability benefits.
Things to remember when applying for an auto title loan
An auto title loan can help get a quick financial fix in an emergency or incident. However, you should also be aware that auto loan interest rates can be quite high, so you should at least be prepared to pay off your loan and the interest on time. In addition, there is a risk of losing your vehicle to the lender if you cannot repay your loan. With these things in mind, find a loan company that offers flexible loan amounts and payment terms. You should be able to find one that offers loans and payment schedules that you can manage and are comfortable with.
Most importantly, always carefully review the loan terms. This not only applies to auto title loans, but also to all types of loans. Loan companies will give you the loan terms in writing before you sign it. Check to see if the document meets the Federal Truth Regarding Lending Act requirements, especially disclosure of the cost of the loan. Term details should include finance charges and APR. Other fees, such as processing fees, document fees, loan origination fees, late fees, property fees, and lien fees, should also be disclosed in the loan terms.
If you find yourself in a situation where an auto title loan is your only option, you should know the basics of the loan and understand the terms of the loan. Carefully read and go through every detail of the loan terms, which will be provided to you in writing by your lender. Also, be sure to cover your repayment options when it’s time to pay off your auto title loan. Remember, you are putting ownership of your vehicle on the line, so be prepared to take it back.