Nearly everyone experiences financial hardship at some point in their lives. If you’re struggling to pay your bills, you may want to consider obtaining a title loan to get the cash you need to make ends meet. How do title loans work? Here’s everything you need to know about this quick cash solution:
What is A Title Loan?
A title loan is a type of secured loan that a borrower can obtain by using the title to their vehicle as collateral. If you are interested in obtaining a title loan, you can use the title to a car, RV, or motorcycle as collateral to secure your loan.
How Do Car Title Loans Work?
The way a car title loan works is very straightforward. If you need cash in a hurry, you can apply for a car title loan using the title to your vehicle as collateral.
If you are approved, the lender will place a lien on the title to your vehicle. You won’t have to give the lender your car keys if you accept cash from a car title loan. You can continue to use your vehicle while you make payments on your car title loan. But if you stop making payments, the lender may take possession of your vehicle to repay your debt.
What is Needed For A Title Loan?
You will be asked to submit certain documents as part of the application process. Be prepared to provide:
- Your driver’s license
- A lien-free title to your car, RV, or motorcycle
- Paystubs or other documents that serve as proof of income
The documents you will need to submit during the application process will vary from lender-to-lender. It’s best to reach out to your lender directly to find out what other documents you may need to submit to apply for a car title loan.
You will also need equity in your vehicle in order to get approved for a title loan. Auto equity is defined as the difference between what you owe on the vehicle and what your car is worth. For example, if you owe $5,000 on a vehicle that is worth $12,000, you would have $7,000 in equity.
Do I Need A Title to Get A Title Loan?
In short, yes, a title is needed to get a title loan. The title to your vehicle is used as collateral to secure a title loan. Without proper title paperwork, the Loan Officer may not be able to verify the legal owner of the vehicle, further complicating and extending the loan process. Your title must have your name on it. You may still be able to get approved for a title loan even if you are not the only person listed on the title.
If you can’t find the title to your vehicle, it is possible to obtain a replacement. Contact the Department of Motor Vehicles (DMV) in your state to find out what steps you will need to take to get a new title.
Do I Need Good Credit to Get A Title Loan?
Don’t assume that you won’t qualify for a title loan simply because of a low credit score. Traditional lenders often [KL1] rely on a borrower’s credit score to determine how likely it is that they will repay their debt. But title loans are secured by collateral, which makes the transaction less risky for the lender.
Because of this, your credit score may not play a major role in determining whether or not you are eligible for a title loan. Many people with low credit scores are able to get title loans, so don’t let this stop you from submitting an application.
How Much Money Can I Get For A Car Title Loan?
The amount of money you can obtain through a car title loan will depend on:
- Value of your vehicle
- State laws
You cannot borrow more than the value of your vehicle. Your lender will inspect your vehicle to calculate how much it is worth. A number of factors will be taken into consideration when calculating your vehicle’s value, including the make, model, condition, mileage, and age.
Lenders will also consider your income when determining how much to let you borrow. This ensures that the lender does not make the mistake of allowing you to borrow more than you are capable of repaying.
Finally, state laws can affect the amount of money you are able to obtain through a car title loan. Some states, including Arizona, California, and Georgia, have established minimum and maximum title loan amounts. For instance, in Georgia, the minimum is $3,010. This means if your car is worth less than $3,010, you will not be able to obtain a car title loan in this state.
How Much Are Payments On A Title Loan?
The amount that you are expected to pay every month will vary on a case-by-case basis. Some of the factors that will affect the monthly payment amount include:
- Amount of your title loan
- Interest rate
- Credit history
Before accepting a title loan, make sure you are comfortable with the payment terms. Do not sign for a car title loan unless you know you are capable of making the agreed upon payments, otherwise you could risk losing your vehicle.
How Long Do You Have to Pay Back A Title Loan?
A car title loan can be a short-term loan. The amount of time you will have to pay your title loan back in full will vary depending on the terms you agreed to with the lender. But in general, the repayment period for car title loans is between one to three years.
Be sure to carefully read the terms of your agreement so you know how much time you will have to pay off this debt.
Can You Pay Off A Title Loan Early?
You will not be penalized for paying off your loan early with LoanCenter. In fact, LoanCenter encourages borrowers to pay off their loans as quickly as possible in order to save them money. The earlier you pay off your title loan, the less you will have to pay in interest. This is why if you are financially able to, it’s always wise to pay off your loan early.
What Happens If I Can’t Pay My Title Loan?
You will get to keep your vehicle as long as you consistently make on-time payments to your lender. But if you stop making payments, your lender has the right to take possession of your vehicle.
Can I Apply For A Title Loan Online?
You can begin the process of applying for a title loan online through the LoanCenter website. Submit your information using the online form. Then, wait for a LoanCenter representative to contact you about your application. The representative will help you understand what documents you will need to submit and what other information you will need to provide in order to finalize your application. Once the application is finalized, simply wait to find out whether or not you have been approved.
That’s all it takes to apply for the cash you need from a title loan.