Car title is a phrase many people are familiar with, but it is also known by other names, include title pledge, title pawn and pink-slip loan. Whatever name is used, these loans are growing in popularity with many because of easy approvals and fast cash dispersal. What are Car Title Loans? If you’re not that […]

What are Car Title Loans?

If you’re not that familiar with car title loans, here’s what you need to know. They are an alternative to traditional loans and designed to provide temporary relief to those in a financial bind. Short loan terms of about 30 days are standard, but most states allow loan renewals to give borrowers extra time to pay off the debt. Approvals are linked to vehicle collateral and not credit scores.

While traditional lenders always run a credit check to see if the applicant pays their bills on time, title lenders don’t bother checking credit. The purpose of these financial investigations is to determine whether or not an applicant is likely to pay back the loan money. Title lenders believe every applicant will pay back the loan because the borrower’s personal property is tied to the debt. Borrowers assume all the risk when they pledge their car, motorcycle, SUV or other vehicle as collateral. In the event the loan is not repaid, the lender is within their legal rights to repossess the car to settle the outstanding title loan debt. Fortunately, most borrowers are eligible for loan renewals, which provides additional time to get the loan paid back and prevent vehicle forfeiture.

If you’ve heard news about title loans, you may have heard that interest rates are extremely high. That is not always true. While rates may be higher than mainstream loans, title lenders often offer competitive interest rates within the industry. And, some states set limits on how much interest lenders may charge. Lenders may occasionally offer zero-interest loans for a limited time. Bottom line- consumers have options and should discuss interest rates with the lender before signing a loan agreement.

Qualifying for a Loan

Vehicle collateral is the main qualifier for an auto title loan, but it is not the only one. Some lenders have more requirements than others, as do some states. Basic requirements are to be at least 18 in nearly all states and own the car that’s up for collateral. Vehicles need a clear title for the majority of lenders to make the loan, but there are a few locations where borrowers don’t need a lien-free title for loan approval. Other requirements might include proof of identification, an income and proof on insurance. Lenders often make loans available to those who are unemployed.

Applying for Title Loans

Some lenders have physical locations for applicants to apply in person, while others offer title loans online. Of the two options, online offers the most convenience. Instead of waiting for the loan location to open during its normal business hours, you can go online and apply at your convenience, 24 hours a day. That works extremely well if you have a busy lifestyle, and if you want to have the maximum privacy. By applying online, only you know that you are looking for financial help.

Applications typically ask for your name and contact information and the specs of your vehicle collateral. That would be the make, model, year and style. Usually, online applications have a list of vehicles for you to choose from, so there’s no need to actually type in the specs. You will need to add the mileage. A good estimate is acceptable if you don’t know the exact number. Some applications go a bit more in depth, asking for employment or income information. Even those with more questions don’t take long to complete. Once you’re done, and the application is submitted, you get a quick loan estimate. That means you will know right up front how much cash you can expect to receive.

Once you get the offer, you get a call from a loan agent. If you applied directly with a lender, you complete loan processing, and collect the cash. Some applicants apply with an agent that helps them find the right loan. The process is pretty much the same, but after getting the loan quote, you get a call from a representative who connects you to a lender near you. How using a middle-man of sorts benefits the consumer is that you only need to complete one application, and the agent puts it through to multiple lenders to see which one has the best offer. Some people already know of a reputable title lender to apply with, but others need assistance. It’s also beneficial when there is no title lender operating directly in your community. In both cases, processing is fast. Most people get their cash in less than a day of applying.