Title Loans
There are a lot of different loans available if you’re looking to borrow money. While many of these might seem like viable options, you might find they’re not the right solution if you need money quickly or if you have less than perfect credit. Fortunately, a title loan is one option that’s almost universally available to everyone, regardless of your credit score. So what are title loans, and how do they work?
What is a Title Loan?
Essentially, a title loan allows you to borrow money using the equity in your vehicle as collateral. A lender will offer you a loan amount based upon the value of your vehicle. When this happens, the lender applies a lien to your vehicle’s title, which basically means they have a legal right to repossess and sell your vehicle if you’re unable to repay the loan.
That being said, there are really two different kinds of title loan. An auto pawn loan works like a regular pawn loan. You drive your car to a lender, they’ll evaluate it and then offer you an appropriate loan. While this sounds like a quick and easy solution, there are three potential problems with these types of loan.
Firstly, you’ll probably be required to surrender your vehicle for the duration of the loan. In other words, the lender might keep the vehicle at his location until you’ve repaid the loan in its entirety. This leads us to the next potential problem: you may only have a month to repay the money and the lender may not be required to extend the loan by another month.
Lastly, the annual percentage rate (APR) of the interest is usually very high; more specifically, it could be as high as 300% or 400%, depending upon your location and your lender. The lender is required to disclose all these conditions to you, so make sure you’re aware of them before you sign for anything.
The second type of title loan is a regular auto title loan. These are a little different in that you’re not required to surrender your vehicle and you typically have years (usually 24 to 48 months) to pay back the loan. As a result, the APR for these loans is usually a lot less. That being said, many lenders might still require you to drive to their location for a vehicle evaluation, while others will allow you to start and finish the entire process online.
Either way, title loans have the advantage of being able to provide cash quickly – often within 24 hours or less – making them an attractive option for anyone needing money in a hurry.
Are Title Loans Legal?
You may have read that some states have made title loans illegal, and while this is basically true, the reality is a little more complicated. Some states have banned title loans completely, regardless of the circumstances or type of loan, whereas others have placed limits on the amount that can be loaned or how much interest can be charged.
If you live in a state with these types of restrictions, it might still be possible to get a title loan via an online lender, since the lender may only be subject to the laws of state in which they are based, and not the state in which they are offering loans.
For example, it’s illegal for a lender based in New Mexico to offer title loans for more than $2,500, so if you live there and need more money you might think you’re out of luck. However, you could find a lender online that’s based in a legal state (say, one that has a limit of $10,000) that can lend you more. Because the lender is based in another state, they aren’t subject to New Mexico’s laws.
Who Benefits from a Title Loan?
Borrowers from all kinds of backgrounds and with many different credit scores will use an auto title loan to borrow money. More often than not, it comes down to how much they need to borrow and how soon they need the money.
Many people have an unexpected expense, such as a funeral cost, that they simply don’t have the savings for. In this situation, even someone with good credit might need the money in a hurry and might use a title loan to get a quick solution. They might qualify for a bank loan at relatively low rates, but the bank can take weeks to approve and then fund the loan.
Other borrowers don’t qualify for bank loans as their credit score doesn’t meet the minimum required by most banks. In this situation, they may be able to find the financial solution they need through borrowing money with a title loan.
As far as the lender is concerned, since the vehicle is used as collateral, a title loan is a safer bet than a regular, unsecured personal loan. If the borrower is unable to pay, the lender has the legal right to repossess the vehicle and sell it to recoup the money that was loaned.
Title Loan Process
We have a very easy and fast way to help you get a title loan and it is also hassle free. We do not care about your credit and if you own your car most of the time we can help you get a loan. Just by using you car as the equity we can help you get the title loan that you need.
Title Loan Laws
The California State Assembly passed a law in 2020 that set an interest rate cap on all loans from $2,500-$10,000 with that title loans was included.
In 2020 California State Assembly set a minimum amount on all auto title loans at $2,500.
In New York auto title loans are not allowed.
Florida law states any title loan made without benefit of a license is void, in which case the person making the title loan forfeits the right to collect any moneys, including interest & principal.
New Hampshire's title loan law has this in the law books A title loan lender shall not: " Make a loan to a borrower who currently has an outstanding or who has had an outstanding payday or title loan within the previous 60-day period. As part of its application process for such a loan, A lender shall obtain a written statement under oath from the borrower certifying the borrower does not have an outstanding and has not had an outstanding payday loan or title loan within the previous 60-day period.
How Much Money Can I Get With a Title Loan?
This really depends upon a number of different factors. For example, there might be a legal limit in that particular state (such as the $2,500 mentioned for New Mexico) and the lender himself might have a limit on the amount they are willing or able to lend. Lastly, of course, it depends on the value of your car, but this isn’t as straightforward as it might initially seem.
You might have paid $15,000 when you bought your car from the dealer last month, but that’s not necessarily the true value of the car. Even if you negotiated and paid the Kelley Blue Book value, the chances are you paid more than the car’s true value. Dealers will buy cars and sell them based upon the Black Book value, which is based upon the wholesale and auction value of the car.
This is also the value used by lenders when determining how much your car is worth. When calculating this value, the lender will need to take into account the make, model, age, mileage and general physical condition of the car.
Beyond this, a lender might only offer a percentage of the value as the car will depreciate over time. For example, if your car is worth $10,000 but you’re considering a loan for 3 years, the lender might only offer $7,500 to account for the depreciation.
What’s Required to get a Title Loan?
The requirements will vary a little, but lenders will typically ask for the following:
· Vehicle title
· Proof of income
· Proof of residence
· References
· Vehicle pictures
· Photo ID
You’ll need to be listed as the owner on the vehicle’s title, but even if you already owe money to another lender, you might still be able to qualify. Not all lenders will do this, but if your vehicle has enough equity, some lenders are willing to pay off an existing loan and allow you to pocket the rest. The previous lender will remove their lien, allowing the new lender to have themselves added as the new lienholder.
In terms of income, you’ll need to prove your ability to repay the loan. Some lenders may require you to have steady, full time employment, but others will lend to the self-employed or those drawing social security benefits or are receiving other regular forms of income. For example, some lenders will take alimony payments into account but income from child support is rarely considered.
Lenders will also need to see proof of residence, but you may only need to provide a bill or bank statement with your name and physical address dated within the past thirty days.
You’ll typically need to provide the names and phone numbers of references, but the number of references will vary by lender. Most request at least two, with some asking for four or more. These references are not contacted during the application process, and are only called if you start to miss payments and fail to contact the lender.
Lastly, before you can receive your funds, the lender will need to see your vehicle and a photo ID. Depending on the lender, you may be required to drive to a physical location so your vehicle can be inspected. Other lenders, especially the online lenders, will only ask for you to take photos of your car (including the odometer and VIN number) and submit them to your processor.
Similarly, you’ll need to provide a photo ID to verify your identity. This is typically a government issued photo ID, but again, some lenders might be flexible in their requirements.
What Fees Are Charged When I Take Out a Title Loan?
The type and the amount of fees charged will vary by lender and from state to state, but every lender is required to make you aware of them before you sign for the loan. Most lenders will charge you an origination or admin fee, which typically varies from 1% to 5% of the amount being financed. This fee covers some of the costs involved with marketing, payroll and utilities for the lender.
There’s also a fee to cover the cost of applying the lender’s lien to the title. This is usually a relatively small amount, but again, it will vary from state to state, depending upon the DMV in your area.
Lastly, of course, there’s the interest (called a finance charge) and there might be late fees and fees for payments denied by your bank (called a Non Sufficient Funds charge, or NSF) but these won’t be applied until after you take the loan.
What Are the Funding Options For a Title Loan?
Many lenders will provide you with a number of different funding options. Some might be able to give you cash, either when you go a store to sign for the loan or by picking up your money at a third party location, such as MoneyGram.
Wire transfers and direct deposits are another common form of funding. If you sign the agreement early in the day, the money is sometimes available before the end of the day.
If you’re not in a hurry, you can usually choose to receive a check. Again, depending on your lender, you may be able to have this sent via an overnight delivery, but otherwise you’ll need to wait for the postal service. And then, of course, you’ll need to deposit the check and wait for it to clear before being able to use the funds.
What is a Simple Interest Title Loan?
Simple interest is based upon the outstanding principal balance of the loan and is applied to the balance on a daily basis. The actual dollar amount is calculated by dividing the APR of the loan by 365, dividing again by 100 and then multiplying that amount by the outstanding principal balance.
As a simple example, a loan with an outstanding principal balance of $10,000 and an APR of 36.5% would accrue interest at a rate of $10.00 a day:
1. 36.5 (APR) divided by 365 = 0.1
2. 0.1 divided by 100 = 0.001
3. 0.001 multiplied by 10,000 = 10
Interest continues to accrue until the principal balance is entirely paid off. It should be remembered that interest is only based upon the principal, not the total outstanding balance of the loan. In other words, if your principal balance is $10,000 but your total balance is $11,125 (including interest and fees) then you’re only charged interest on the $10,000. It’s illegal for a lender to charge you interest on interest accrued or on any late fees and NSF charges.
The trick here is to lower the principal balance as quickly as you can. If, for example, you borrowed more than you needed, use the remainder to pay off some of the loan. Likewise, if you find yourself with extra cash, put it towards the loan. Although your monthly payments won’t change, you’ll pay less interest and pay off the loan sooner than scheduled.
How Long Do I Have to Repay a Title Loan?
As we discussed earlier, you may be required to pay back an auto pawn loan in only 30 days, but a regular auto title loan will give you years to repay the money. A typical loan term could be 24, 36 or 48 months, but some lenders may go to 60 months while others might go as low as 12 months. Lenders are sometimes flexible and will allow you to choose an alternate term, such as 30 or 42 months.
Longer terms provide lower monthly payments, but you’ll also pay more over the lifetime of the loan. However, even if you intend to pay back the money within a few short months, it’s often a good idea to take a longer term because you’ll save more interest by paying it off early.
How Do I Make Payments on My Auto Title Loan?
Payments are required on the same date and on a monthly basis. The payment date is typically determined by the date you signed for the loan. For example, if you signed for the loan on April 15th, your payments will be due on the 15th of every month, starting May 15th.
Many lenders will allow you to change your due date, but only after you’ve made your first payment. Additionally, some lenders might limit the number of times you can change your due date or might require you to provide a valid reason for the due date change, such as a change in your job or pay schedule.
The vast majority of lenders will take payments by check, money order, cashier’s check or by direct debit from a checking account. Automatic payments can also be set up from a checking account. Debit cards are almost always accepted (since the money comes from your checking account) however many lenders won’t accept payments with credit cards.
This is for several reasons;
Can I Sell My Car If I Have an Auto Title Loan?
Legally, no. If there is a lien on the vehicle’s title, you’ll need to pay off the lienholder before selling the vehicle. It’s illegal for a vehicle to transfer ownership while there’s a lienholder and the new owner would not be able to register the vehicle in their name. It’s also illegal for a lienholder to ask the new owner to repay the loan; however, they are entitled the repossess the vehicle if you fail to make your payments.
What Happens If I Have an Accident While I Have My Auto Title Loan?
If you’re involved in an accident, you should always let your lender know as they’ll need to know the extent of the damage and the location of the vehicle. If the insurance company determines the vehicle is a total loss, the lienholder will be the first to receive any payout that’s due.
If the payout is more than what you owe (including interest and fees) then the lienholder will use the money to pay off the loan and you’ll receive a check from your insurance company for the rest. If, however, the payout is not enough to pay off the loan, then you’re still responsible for the difference. If you’re unwilling or unable to pay, the lienholder is entitled to take legal action against you.
1. How can you make payments
2. Will a title loan show on my credit report?
a. Some do, some don’t
b. Can be a good thing – helps to rebuild credit
3. What happens if you don’t make payments
a. Hit on your credit
b. Additional interest
c. Late fees
d. Repossession
4. What if you can’t afford the payments
a. Prioritize your bills
b. Due date changes
c. Deferments
d. Rewrite
5. What if you pay the loan off early?
a. Prepayment penalties?
b. Less interest paid
6. What happens after you pay off the loan?
a. Loan company releases the lien or sends a Lien Satisfied note
b. You get a clean title from the DMV
Car Title Loans - How Can They Help?
When you need to get a title loan it is easy!
Step 1- Just submit an application to us. It is very easy to do and with this you can get your money as soon as one business day and in some cases you can get it the same day!
Step 2 - Submit the needed documents. This is usually very easy and most of the time only a few documents are needed.
Making A Title Loan Work For You
So we know that you need to own the title on the vehicle to get a title loan on it and also the value of the vehicle is also important that way you might have an idea of how much money you can get for your car.
A current utility bill is usually needed to prove your residence because most of the time a license will not have the most current address.
The car needs to be assessed to decide how much the vehicle is worth. Does it have major damage? Is there no damage at all? Both of those items can help a title loan company decide how much to give to an applicant.
To sum this up there is also another question that you need to ask yourself. What do you need the title loan for? Is it due to the COVID-19 and you are out of a job or coronavirus put you on furlough? Just short on money this month? Is there an emergency that cash is need for?
All of this can make a title loans work for you. You can get money fast when you use a title loan.