Car title loan is a type of loans when the borrowers use their vehicle’s title as collateral in exchange of earning small amount of money for short time. The borrowers will have to give the hardcopy of their vehicle’s title to the lenders. However, it will be returned to the borrowers once they repaid their debt. The period of time you have to repay is varied from one loan institution to another. However, the average period to repay is around 30 days max. If the borrowers couldn’t repay on time, the vehicle will be under the lender’s possession and they can do anything to it. Most of them sell the vehicle to cover the debt of the borrowers.
Steps by steps car title loan
Basically, you can get title loans from online loan institution or at store. Millennial might find it easier to choose online loan but it is your choice to decide. Here are steps you need to know if you are planning to borrow money through car tittle loans:
- You need to prepare important documents possibly needed to secure the loan. They usually include personal ID, driver license, documents regarding to residency, proof of income, car registration, references, as well as lien-free car title in the borrower’s name. Some states require auto insurance. You also need to prepare your application and your vehicle.
- The lenders will process the loans and they may check a thing or two before giving their approval. Some borrowers with bad credit score may be worried about it. However, most lenders don’t pay attention to credit score. They may ask borrowers about regular source income or their employment to know if borrowers can repay the money they are going to borrow.
- The process may not take longer than half an hour. The amount is usually not over $1000 because it will be too risky for lenders to lend that much. Basically, the maximum amount of loans is decided by the collateral. Thus, the vehicle’s value is what important the most in this deal. If the value is low, the amount of loan will be low as well.
- Interest rates of title loans are varied, mostly ranging from 36% to over 100%. If you can’t repay the loan, the lenders will hold your vehicle’s title 30 days at max. If you still don’t repay, the vehicle will be under the lender’s possession. They usually sell the vehicle through auction.