If you are in need of some quick influx of money, but your credit score situation isn’t all roses, getting a title loan might be a solution.
This kind of short-term loan requires you to provide your car as collateral and has a high interest rate (usually a 300% annual percentage rate or APR). To be eligible for this kind of loan you have to be the outright owner of your car, and if you don’t manage to pay your rates in time, the lender has the right to repossess it. It’s similar to a payday loan in the fact that you usually have 30 days terms for a lump sum rate payment.
As with every financial decision, a loan is something that shouldn’t be taken lightly. We’ll try to explain as simply as possible the exact car title loan requirements and how to be granted the loan ASAP. Before starting to go into the whole deal, you should think about a couple of things, how much cash you actually need and not overdo it with the amount and be certain that you have a plan for paying out the loan in time, so you don’t lose your car for a fraction of its value for no reason.
In order to apply for a title loan, you’ll have to bring both your vehicle and the necessary documentation to the lender. The vehicle will undergo an inspection so the lender verifies its condition, and they will check if you have the complete documentation needed. Here’s the list of needed documents:
Some lenders may also attach a GPS tracking device to your car so that they can track it or even disable it if you don’t successfully make the payment in time.
The lender usually won’t check your credit score at all, so don’t worry about that side of the agreement. On the other side, the fact that you can get a loan with a bad score means that the interest rates will be very high. They also will not check if you are currently employed. The amount of cash you can loan usually equals 25% of the estimated vehicle value, so also have that in mind. This percentage can vary, though, some lenders may approve up to 50% of the cars worth for the loan, so be sure to inquire what different lenders have to offer if you require a bigger sum. Also, make sure you already know the estimated value of your car before their appraisal to make sure you’re getting a good deal.
The whole process from applying for a title loan to leaving with the money in your hands can be done for as little as 30 minutes. The main thing is to be prepared beforehand, make sure that you’ve gathered all the listed documentation, and also that your state actually allows this type of loan (not all of them do). The lender will appraise the car’s worth and check its condition, but you should have your car appraised by a third party beforehand to make sure you know its actual value. If you’ve prepared everything correctly and there is no problem with your license and car title, the whole process shouldn’t last more than half an hour and you can get to solving whatever the financial crisis was that made you take up the loan in the first place. From the moment you leave the lender with the cash, the repayment period begins. Make sure that you will be able to make the payments in time, to avoid losing your vehicle which is worth a few times more than the loan itself.
These types of loans should be considered only as a last resort, so if you’re not in dire need of instant cash, or your credit score is good enough to try and get a traditional one, you shouldn’t rush to getting a title loan, as tempting as it sounds to have the cash in your hands so quickly. If you do decide, you’ve been provided with a concise list of what is needed and tips on how to avoid prolonging the waiting period for approval.