It’s impossible to predict when you will find yourself in serious financial trouble, but knowing that there is a place where you can always get instant help makes things easier. And online loans do come in handy if you need to pay for car repairs, buy a new appliance, make home innovations, deal with medical bills, or cover any other urgent expenses. Car title loans take pride of place among the popular lending options today. Such an urgent money injection turns out to be really effective, but there are also some nuances you should be aware of. And we are ready to help you figure it out!
Title Loans: All the Peculiarities and Nuances
A title loan is a type of short-term secured cash advance, meaning it requires collateral to secure the deal with your lender. In this case, the borrowers use a pink slip, a certificate of ownership of their car, to ensure they will repay the loan. Although you sign over your car title, you can still use your vehicle as long as you make on-time payments.
In general, this is a great option for applicants who cannot get a loan from a bank because they already have an outstanding debt to pay off, experience temporary job problems, or cannot boast of a large income. What’s more, you can get car title loans near me at a storefront location in your state or online right from your home. Feel free to explore other important peculiarities of this lending option:
The Procedure of a Title Loan Approving
There is nothing super complicated in the procedure of title loan approval. It all starts with filling out an application, and providing your personal details and required documents. Please note that you must be the sole owner of the car without any liens against your title. In addition, you must be an adult resident of the state in which you are applying. Now, explore the papers you will need to provide to get approved for title loans.
In addition to these documents, you will also need to give the lender a copy of your vehicle’s keys and provide the names and phone numbers of at least two references (your relatives or friends). What’s more, some providers require you to have a GPS tracking device in your car in case you default on your loan and want to ride off into the sunset.
And so, if you provide all these documents to the lender, the loan approval procedure will be successful. And do not forget that your car must be in good condition. Otherwise, the lender may not accept it as collateral.
How Long Should You Wait to Get Approved for Title Loans?
The waiting time for your title loan depends on the lender you choose. But since US residents use this money-borrowing option to cover urgent expenses, local providers process loan applications rather quickly. In general, the fastest way to get funded is to apply for online title loans. Thus, you get instant approval, and the money is transferred to your bank account within 1-2 business days. Offline application takes a little longer as you have to spend some time dealing with paperwork.
How Many Title Loans Can the Borrower Get at Once?
Borrowers are not limited in the number of outstanding car loans in the US, but there is a fine point to know about. No lender will give you two or more loans secured with the same vehicle. The fact is that one title is used only for one cash advance. Therefore, you still can get multiple loans provided you secure them with different cars, boats, motorcycles, etc.
Extra Fees and Pitfalls for Title Loans
Not everything is so rosy with title loans. Just like any other lending option, these cash advances have their drawbacks you should be aware of. Car loans are generally considered high-risk for borrowers, and here’s why:
High interest rates and extra fees
Whether you take out car title loans online or offline, their interest rates are traditionally higher in comparison with other lending options available to US residents. In addition, besides high APRs reaching 300%, you may also face some additional fees that will make your loan even more expensive. Here are the charges you may need to pay:
- Early payoff fees
- Late penalties
- Appraisal fees
- Balloon payments
- Transaction/convenience fees
- Origination fee
Risk of losing your vehicle
While title loan lenders are happy to give you money, the consequences of non-payment are severe. According to the Consumer Financial Protection Bureau, about 20% of Americans lose their cars due to the inability to repay the debt. So if you default on your loan, the lender will confiscate your vehicle and sell it to get back the money you owe. At the same time, if the car is sold at a lower price than it costs, you will have to pay the rest of the amount. And if the lender manages to sell your car for more, they keep that difference as well. So you fight a losing battle either way.
Probability of getting into a cycle of debt
Title loans may also lead to a debt trap due to their short repayment period. After all, you borrow a fairly large amount and undertake to return it within 15-30 days. So most borrowers find this task overwhelming and renew their loans over and over again. According to statistics from the Consumer Financial Protection Bureau, only 12% of borrowers return the money on time in one payment, while about 30% of debtors renew their car loans 7 or even more times.
What Are Title Loans Terms and Conditions?
To make the best out of your cash advance and avoid getting into trouble, you should know all the terms and conditions of your title loan. They are traditionally the same no matter what state you live in. And so let’s find out what you have to deal with when applying for a car loan.
The Reasons the Lender Can Deny Your Title Loans
Although title loans are considered easy to get, some applicants still get rejected. What prevents them from getting a cash advance with their vehicle? Let’s consider the possible reasons.
About Title Loans Costs
It’s no secret that title loans tend to be a bit more expensive than other types of fast financing. The interest rate is set at 300% annually, meaning lenders charge you 25% of your loan amount per month. So if you borrow $1 000, you will have to pay back as much as $1 250 when the term of your cash advance expires (i.e. after 30 days). In addition, do not forget that lenders may charge you additional fees, which often amount to $25 or even more.
How to Effectively Clear Your Title Loans
Since late payments are fraught with negative consequences and hit your pocket severely, it’s extremely important to repay your debt on time. So how to discharge title loans by the due date? We have prepared some effective tips to help you.
Title Loans Alternatives You Should Know About
Many lending options prove to be better than title loans. Here are a few to keep in mind in case car loans do not work for you.
Personal loans are unsecured, so you will not lose your property in case of default. The amounts and repayment terms are flexible, and your credit score does not really matter either. But their main advantage lies in low APRs, which usually do not exceed 36%.
These short-term cash advances are similar to car loans, although they are unsecured. APRs are also quite high, but repayment terms are friendlier as you can ask the lender to extend your loan term up to several months. These cash advances are small-dollar; you are allowed to borrow up to $300 – $1 000, depending on the state.
Family and friends
This is one of the fastest, easiest, and most profitable ways to borrow money. After all, your friends or relatives are unlikely to expose the same harsh interest rates as title or payday lenders do. What’s more, it will be much easier to agree on the due date for debt repayment.
The Final Word
Title loans are a good way out for those who are in financial distress and have no other option to get money quickly. Accessibility, fast processing time, and flexible amounts are the main advantages of these cash advances. But do not forget that you can always find less risky and cheaper alternatives that also work well for emergencies. So take your time to explore all available lending options in your area. If you do decide to apply for a title loan, we are always happy to help you get the best deals!