When title loans came on the scene some 30 years ago, they opened a whole new market for those who couldn’t borrow from a traditional bank, whether because they aren’t eligible or because they don’t have time to await what usually is a long approval process.
Since then, such loans have become increasingly popular among those in need of quick cash, usually for some emergency or another, in exchange for temporarily relinquishing their vehicle title. Keep reading for more things to know about title loans.
Title loans are short-term loans that uses vehicle titles as collateral. Borrowers can still drive their car during the life of the loan – a key feature. However, before taking out a loan, borrowers must be certain they can repay it. Otherwise, their vehicle is at risk of being seized and sold to cover the loan. And note that “vehicle” can mean a motorcycle, boat, or recreational vehicle, in addition to a car or truck.
Other than a lien-free title and vehicle, the main thing borrowers need with their online application is proof they have the income to repay the loan. This is usually in the form of paystubs, bank statements, or tax returns. Some companies will lend to those who do not have a job, if they have other regular earnings such as from a VA check, for instance.
Depending on the lender and state, borrowers will also generally need proof of residence, proof of insurance, and a government-issued photo ID. In addition, they must supply recent, multi-angle photos of their vehicle, including its interior and a clear shot of the odometer.
How Much Can I Get?
The amount you can borrow largely depends on factors such as the vehicle’s make, model, condition, age, and mileage. That’s not to say, for instance, that a well-maintained older car with low miles can’t get as much, or more, than a later-model vehicle that’s been, well, run into the ground. What the amount will likely not be based on is your credit score; most companies don’t even check. They have your title as collateral, which mitigates any lender risk.
In general, though, you can expect to get between 25 to 50 percent of what is deemed your vehicle’s value. Loans tend to range from $100 to $10,000 and sometimes even higher. Even $50,000 is not unheard of. If you want to know more about possible payouts, check out title loans near me.
How Soon Can I Get Cash?
In some situations, funds are available within minutes, and commonly within 24 hours. If you have direct deposit set up, many lenders will put cash directly into your account. If you don’t, you may want to establish one before applying. In some cases, borrowers can go to a physical location and pick the money up.
What About Repayment?
Again, this varies, but borrowers will typically have 30 days or less to repay the loan, plus interest. Fees usually include a 25 percent monthly finance fee, which means an APR of 300 percent — a rate most borrowers won’t face due to the loan term. If it’s an installment loan, borrowers may be making monthly payments for up to a year or more. Some companies will even allow borrowers to extend their loan.
In any case, title lenders are legally bound to provide borrowers with loan terms in writing — before signing — and must be honest and forthcoming about the loan’s total cost.
So those are among the main things to know about title loans, which as we say, continue to rise in popularity, particularly in this uncertain economy. They’re a legit prospective resource when cash is needed fast.