If you need quick cash but your credit score is sub-par, online car title loans are your best option. Put simply, title loans are under secured loans where borrowers place their vehicle title as collateral. The lender places a lien on the vehicle title and temporarily owns the hard copy of the vehicle title. On defaulting payment, the lender is liable to repossess and sell the car to cover the borrower’s outstanding debt. Title loans are short term and can be processed in as little as 15 minutes. They however tend to carry slightly higher interests compared to other forms of loans. The lender will not check your credit history but will consider the value of the car you are placing as collateral. These loans have been offered since early 1990’s and they are your best chance of saving your day from financial turmoil when your credit cannot warrant you a loan from other sources.
How Do Title Loans Work?
Title loans work as cash advances. They may be offered for a 30 days term with term extensions. However, the term extensions that some borrowers take out will lead to increased debts and threats of repossession. The amount you borrow depends on the value of your vehicle but quite often, the amount cannot be more than 50 percent of your vehicle’s resale worth. To qualify for the loan, you must own the car outright. The process to get loans online is simple; you apply for the loan either online or from a store location, the vehicle’s value is assessed with inspection, you do the paperwork and your loan is processed.
There are some requirements you must fulfill before your loan is processed. First off, you must be above 18 years and in possession of a valid driving license or a state ID. Though this is not a major requirement, it is worth noting. Besides owning the vehicle outright, it must be in good condition. Trying to pass off a car with mechanical issues may get your loan application disqualified followed by penalties. Though the lender is not interested with your credit seeing that there is a vehicle placed as collateral, they may want to be sure that you are in a position to repay the loan. To this end, they will ask for your employment and income details.
The loan period is quite short with a series of rollovers. The period may be as short as 10 days, 30 days or even more.
Benefits of Title Loans
There is only one way to enjoy the benefits of title loans; keep the interest from ballooning. You can do this by repaying on time. This loan set up came about in a bid to help individuals with bad credit but still need money. The first benefit is fast access to money. Small loan amounts (say $100) can be processed within 15-30 minutes while large loan amounts (as high as $10,000) are processed within 24 hours.
Unlike other sources of credit, title loans are offered with less hassle. Seeing that you have already given your car as collateral, there will be less paperwork and less background checks. Title loans do not have the highest interest rates. If you compare them with unsecured car loans, their interest rates are reasonable. Nevertheless, a borrower should be aware of the high interest rates that may arise on defaulting payment. This may also lead to repossession.
Title loans come with a series of rollovers which allow the borrower more time to pay off the loan. Without rollovers, the lender would just have to repossess the vehicle and repay the outstanding debt. You get to keep your car as you continue repaying and car insurance is, in most cases, not a requirement. The greatest benefit however is that your credit history does not matter.
Stay on the Safe Side
Many borrowers delve into title loans without reading their auto title loan agreements. Though rollovers and short term loans are a great chance to repay the money and get your car title back, they can easily accumulate and the money you owe surpasses the value of your car. If you read the terms of a loan carefully, you do not have to take a loan with excessive interest rates. The good thing is that there are lots of lenders out there. Choose the best and enjoy a loan with bad credit.