Understanding the Details of How Car Title Loans Work
Auto title loans are one of the best ways to get access to cash quickly.
There is some confusion about how the process works largely because of the wide range of regulations and companies across the country.
The loans are actually very simple to qualify for and repay. Anyone who is interested in a car title loan should understand the details of the process.
Own a Qualified Vehicle
The vehicle used to secure an auto title loan needs to qualify in a few basic ways. The first requirement is that there must be a clean title for the car.
This means a title with no liens against it. There are some exceptions where a title is not necessary although these are rare. The vehicle must be taken to the lender for inspection so that an accurate value can be placed on the car. Spare keys also have to be provided if they are available. Although auto title loans are mostly for cars, other vehicles with a title like a boat can be used as well.
Meet Basic Borrowing Requirements
The borrower must also meet a few basic requirements. The first is proof of residency and identity.
The second requirement is proof of a stable income. This could be income from a permanent job or income from an annuity or another regular source. Borrowers must also have a valid bank account. Something that is not required is a credit check. This is because the vehicle is acting as collateral against the loan.
Choose a Lender and Loan Amount
The next step is to choose a lender and a loan amount. Comparing lenders is always a good idea.
Lenders like VIP Title Loans provide car title loans with low-interest rates and low monthly payments. It is always best to choose a lender that is registered in the state. Choosing a loan amount depends on several factors. Monthly income and the value of the vehicle will restrict the amount that can be borrowed.
Typical auto title loans are usually between $300 and $6,000.
Establish a Repayment Plan
The amount of the loan and the interest rate of the loan will both help to determine the terms of the repayment plan. A car title loan can last for anywhere from a month to a year. Some lenders allow borrowers to request a specific monthly payment amount.
Lower monthly payments generally mean longer loan terms. Once the loan is approved, the money is given to the borrower and a lien is placed against the vehicle title. The borrower usually gets to keep the vehicle while the loan is being repaid.
Repay the Loan over Time
The final part of the process is to repay the amount over time. This means making the agreed monthly payments on time every month without exception. Some lenders provide a grace period if a payment will be late. Some local lenders will even work with a borrower if there is a sudden unexpected financial emergency.