How Do Car Title Loans Work?
Car title loans. If you are in need of a loan, perhaps you’ve come across different loan packages including car title loans. This kind of loan is also known as title pawn which is a short-term loan that allows you to use the title of your car as a collateral. Compared to the other kinds of loan, it is considered to be a very expensive type of credit.
Depending on the lending company, you can actually get a loan even if there is no clear title of the vehicle. You just have to choose which kind of loan you want to get sins some of them varies when it comes to interest rate and the duration of the payment.
The value of the loan that you can get me a range from 25 up to 50% of the car’s value. The amount ranges from $100 to $5,000. Some lending companies can go as high as $10,000. You have to pay within 15 to 30 days depending on the terms and conditions of the loan.
What to Consider When Applying for a Loan
Same as other kinds of loans, there are important things that you have to be aware of before you finally decide to get a loan. It is not just the maximum amount of loan. You need to know more about the lending company and the terms stipulated in the loan package.
When applying for a loan, you can either do it online or go the office personally. Unlike traditional loans, you don’t have to think about credit check. Even if you have a bad credit history, it does not mean that you can no longer have your loan application approved.
The requirements vary but the general requirements are almost similar. You will be required to complete an application form. There is also a need to present your vehicle, photo ID, government issued ID, proof of insurance and a clear title. Some lenders may also ask you for a duplicate of vehicle keys.
Once you are ready for the documents, here are some of the things that you have to keep in mind:
Review the Terms of the Loans
Any credit has its specific terms and conditions. Just before you finally decide to get a loan, you must know the terms of the loan. Car title lenders should provide you with the complete details prior to signing for the loan. Ask me if I use types of credit, lenders are expected to disclose the complete cost of the loan.
This should include the breakdown of the finance charge and the cost of credit. The APR or the cost of credit on an annual basis is calculated based on the amount intent to borrow, credit cards, duration of the loan, and the interest rate.
There are cases were in there may be additional charges like for instance title charges, late fees, document fees, and processing fees among many others. The Landing company should also be able to provide all of these pieces of information.
Be aware of any add-on cost.
If there is an add-on cost, you should be aware of it. Take for instance, some lending companies may have road service plan which can make your loan cost much higher. Know if the add-ons are required so it is much easier for you to decide and weigh your options.
How Does It Work?
Once you have chosen a loan package and lending company, the next step is for you to submit all of the required documents. When your loan is approved, you can already get your money and then, the lender gets the vehicle title. Until you are able to finally pay off the loan, you won’t be able to get your car title.
What is a Roll-over?
So let’s say you have already received the full amount of the loan, but the problem is you cannot pay it back in the agreed time period. The lender can actually offer you what they call a “roll-over” which means that your old loan is made into a new loan.
The only thing with a roll-over is that it can be much more expensive since you have to pay for the additional fees and the interest rate. The cost can be quite too high which can result in a dangerous cycle where you will end up paying the cost.
