If you’re in need of fast cash and have a vehicle with a clear title, you may want to consider a short-term title loan, which can get you up to half the value of your vehicle in exchange for temporary relinquishment of your vehicle title.
Keep reading for more about what an online title loan is.
Explain Title Loan
This is a loan with a term of around 15 to 30 days, and sometimes a year or longer. In addition to your car or truck, recreational vehicles, motorcycles, and boats are also often acceptable as loan security.
Loans are usually for between $100 and $10,000, although some companies will go even higher if state regulations allow. Instead of by your credit, which typically isn’t even checked, the amount you can borrow is largely determined by your vehicle – its condition, make, model, age, and mileage. So, you’ll need to submit, with your application, quality photos of your car from all four angles. Take pictures of the interior too, and don’t forget a clear shot of the odometer.
The amount you’re offered also hinges on your income; lenders naturally want to know you will be able to repay the loan. So, as part of the application process, you’ll be asked to submit proof of income. In addition, each state has its own rules and regulations regarding loan minimums and maximums.
What’s the Loan Process?
Before applying for an online title loan, pull together the documents you’re going to need. If you’re going to want the funds directly deposited in an account, make sure you have an account established that can accept wire or ACH payments.
Beyond a copy of your vehicle’s title, you’ll need a government-issued photo ID, proof of residence, proof of insurance, and proof of residence. The latter can be in the form of a bill or rental agreement in your name.
As we’ve mentioned, you’ll also need to provide proof of income — pay stubs or bank statements and the like. You don’t necessarily have to be employed if you can show retirement income, pension documents, or other proof of regular income. Oftentimes, loan funds are available within 24 hours of approval.
It is vital that you understand that failure to repay the loan according to terms mutually agreed upon could result in your collateralized vehicle being seized and sold to cover the debt. Many companies, though, will work with you before taking possession of your vehicle. After all, they’re in the lending business – not the car selling business. If you expect trouble making a payment, let the lender know right away.
How Much Do Loans Cost?
By law, lenders must be forthcoming and honest about costs and fees connected with your loan. They are also required to tell you in writing what your loan term is — the amount of time you will have to repay the loan.
In terms of interest, how much you’re charged will depend on the state in which the lender is based. States such as Arizona, for instance, have caps on title loan interest rates. Having said that, the average interest rate industrywide is 25 percent of the loan total, which comes out to 300 percent annually. Most borrowers will never encounter such a rate, however, since their loan terms are for 30 days or less.
Now that you know what an online title loan is, you can decide whether the option is right for you. Such loans have certainly filled a niche – and need – for those who don’t have the credit history to get a traditional bank loan.