A title loan is a secured credit where debtors can use their automobile logbooks as security. The lender determines the loan amount based on the value of the borrower's car. The borrower typically has to pay back the loan within 30 days. If the borrower cannot repay the loan, they may have to give up their car.
How Title Loans Work
To get a title credit, you'll need to have a clear title for your vehicle. This means you own your car outright, and there are no liens or encumbrances against it.
Title credits can have APRs of up to 300%. If you make your payments on time, you can get your vehicle back at the end of the loan term. You may have the cash you need to cover your emergency expense. Understand all the terms and conditions before taking out a title loan.
You'll also need to bring your vehicle to the lender for an inspection. They will determine how much it's worth and how much they're willing to lend you. Once you've agreed on the loan amount, you'll sign over your car title to the lender as collateral for the loan. The lender will then give you the cash amount of the loan.
Repaying Your Loan
The repayment period for a title credit is typically 30 days, but some lenders may give you longer to repay the loan. If you cannot repay the loan by the due date, you may roll over or renew the loan. You'll pay off the original loan plus any fees and interest charges, then you'll get another month to repay the new loan.
Each time you roll over or renew a title credit, you'll accrue more fees and interest charges, making it difficult to repay the loan. The lender will repossess your car if you are too lax with your loan or can't repay it. Before taking out a title credit, only borrow what you know you can afford to repay.
In most cases, you'll be able to borrow anywhere from 25% of your car's value. The amount of money you're eligible to borrow will depend on the lender and the state you live in.
Once you've been approved for a loan and signed the contract, the lender will deposit the money into your bank account, or you will receive the cash. You'll most likely have access to the funds quickly.
Interest and fees can vary depending on the lender and state laws. In most cases, you can expect to pay an annual percentage rate (APR) of 300% or more for a title loan.
Use Your Title Loan Wisely
When you're facing an unexpected bill and need cash fast, title financing could be a good option to get the cash you need. Before getting a loan for your car title, understand how title loans work and the fees and interest rates involved. Taking out a title loan will help you support your unique financial situation. This form of loan may help you get your finances in order.
