It can be difficult to quickly find money when unexpected financial demands occur; bank loans often require a high credit score, a higher borrowing minimum and a longer waiting period than many other types of loans. Loan applicants who cannot or do not wish to borrow from a bank may find that a car title loan is their best option for obtaining the cash that they need. With fewer requirements than bank loans and competitive interest rates, car title loans simplify the process of borrowing and repaying money.
How Title Lending Works
Because a vehicle’s title, and therefore the vehicle itself, is the collateral in title loan, borrowers do not need the high credit rating that they would to secure more traditional loans. After deciding that a title loan is appropriate for their needs, borrows will want to begin the process by selecting a reputable lender and filling out an application; many lenders put applications online to provide borrowers with a quick, easy way to take their first steps toward acquiring the cash that they need. Once the borrower has completed the application, he or she will be invited to the lender’s location, where the vehicle being considered for a loan will be appraised.
Lenders will also ensure that the car is free of judgments and liens; the vehicle must also be paid off before it can be approved as collateral for the loan. The approval process is generally quite fast, and borrowers who have their car’s title and a piece government-issued identification may be able leave with the money that they need in as little as 30 minutes. As is the case with any loan, the borrower should be certain that he or she completely understands the loan’s terms, interest rates and repayment process before signing the contract and handing over the title to his or her vehicle. Car title loans are often chosen over alternatives because this type of loan allows the owner to keep driving the vehicle throughout the life of the loan, assuming that regular, on-time payments are made.
Availability of Car Title Loans
While there are a few states that prohibit car title loans, most areas allow this type of lending. Some areas require additional documentation and others limit the amount of cash that a borrower may receive when taking out a title loan. Still others cap interest rates at a lower percentage, and some even make it possible for borrows to complete the loan process in its entirety via the internet. Like most loans, every area served by title lenders will have slightly different rules, regulations and laws, which depend on the state or municipality that the lender, borrower or both are located in.
Considerations to Make Before Applying for a Car Title Loan
While getting a loan with a poor or non-existent credit history may seem impossible, those who own their vehicles may find that getting the cash that they are looking for is as simple as filling out a form and taking their car title with them when their vehicle is appraised. As with every type of loan, car title loan availability may vary, so future borrowers will want to ensure that they are aware of the laws surrounding title loans in their area.
