Questions You Should Ask Before Picking Auto Title Loan

auto title loan

While signing up for any type of loan, it is not essential that borrowers know each and every thing about the loan, its formalities, what factor they should weigh and what affects their chance to have a loan. Same is the case with getting an auto title loan. If anyone is considering getting a loan, there are chances that they can be misguided here and there. So, it is important to inspect in detail and try to get as much information as possible before you get your hands dirty. The better you know, the more benefit you will be able to take from the loan.

Questions To Consider

How Much Amount Can You Get And How Fast?

One of the most crucial aspects of getting a car title loan is how much time it actually takes for you to get one. It is said to be easier and faster to get as compared to other types of loans, but how fast is it? A typical title loan lender takes about 24-48 hours to process, approve and hand over the loan to the borrower. It might take less than this time but no lender is known to take more than 48 hours. Regarding the amount you get on the loan, it entirely depends on the value and condition of your car. The most you can get from this loan is about $25,000-$40,000. So, if your needs lie between this range, you can get this loan.

Do You Have To Keep The Car With The Lender?

In the case of almost all movable assets mortgage loans, the asset being mortgaged is kept with the lender even for the duration of the loan. It is to keep the asset safe from any possible damages due to continued use by the borrower. But in the case of an auto title loan, the car is not kept with the lender. The private lenders keep only the car’s title with them and not the car itself. The borrower is free to use the asset even for the duration of the loan without any restrictions. However, the rules might change according to states.

Do I Have To Let Go Of My Car If I Can’t Pay All The Installments?

Since the car’s title serves as a security for the loan, the lender has the right to take the car over in case the loan is left unpaid. But this happens only in very extreme situations. The lender gets in touch with you to reconsider the terms of the loan and adjust them according to your requirements if you are facing problems paying the monthly installments. Only if the lender feels there are no prospects of you paying the loan back do they confiscate the vehicle.

How Much Time Do You Get To Repay The Loan?

A typical car title loan allows for you to pay the loan back in the duration of at most 4 years. However large the loan amount is, it is divided in monthly payments for principal plus interest for 4 years. Even if the borrower doesn’t want to carry the loan on for this long, they can pay it off early. There is no prepayment penalty if they choose to pay the loan off before the loan period expires.

What Documents Do You Need To Get The Loan?

There are not very many documents needed for the application and approval process of an auto title loan. The following are the most essential ones:

  • A clear title of the vehicle.
  • Proof of permanent residency.
  • Proof of legal age and a valid driving license.
  • Proof of registration of the vehicle under the borrower’s own name.
  • A collision deductible insurance policy named under the borrower.

The car being used as collateral should not be more than 10 years old. The title of any vehicle can be used like a truck/motorcycle/van/bus/tractor, etc.

Is The Interest Rate Being Offered To You Competitive?

The interest on a car title loan is considerably higher than the rest of the loan options. And since this loan is given out by a private lender, the regulations and gatekeeping is comparatively. So, before getting such a loan, the borrower must pay special attention to the interest rate being offered. The interest rates charged lie roughly between 20-40%. But some lenders may even charge as high as 300 percent. So, it is important for the borrowers to keep their eyes open for interest rate charges and what is prevalent in the industry.

When Should You Consider Getting A Car Title Loan?

It is one of the most important questions borrowers have when weighing their borrowing options. The main reason why auto title loans are so popular is because they can be availed within 24 hours without much hassle. So, this is when borrowers face towards such a loan. When a borrower finds themselves in a situation when instant cash is required, like a medical or other emergency, getting this loan should be considered. Also, there are no restrictions on where the loan amount can be used. So, when the borrower wants to aid their multiple financial needs, they can consider going for a title loan.

How To Choose A Title Loan Provider?

There are many things that the borrowers should consider before choosing a loan provider. First of all, appropriate proof checks have to be done for ascertaining the genuineness of the lenders. After that, they should engage in a dialogue to assess their acceptability to the needs of the borrowers and what they are willing to do for their satisfaction. If these factors are satisfactory then only should they go forward with a particular lender about loan eligibility and terms.

Conclusion

To conclude, it can be said that getting an auto title loans is an intricate process and each step should be taken with caution. The answer to these questions or any additional questions significant to the borrower must be answered and then only should one take a final decision about getting this loan.

Leave a Reply

Your email address will not be published.