Helpful Tips about Getting a Car Title Loan
Getting a loan can be difficult if you have bad credit or unreliable income. For people who have been denied a loan in the past a car title loan may be the answer.
The process is generally quicker and easier and the prospective borrower won’t have to jump through as many hoops to get the funding they need.
What is a Car Title Loan?
A car title loan uses a borrower’s car as collateral for the sum they are receiving. In simple terms, a lender will take temporary ownership of the borrower’s vehicle until the loan is paid off.
These loans are easier to get approved for because there is guaranteed collateral of the value of the car.
Each state in the US has different lending laws, so applicants should research first whether car title loans are available where they live.
What Payment Options are Available?
Before agreeing to the terms of a loan, be sure to clarify how long the loan will take to repay and how you will make those payments.
Oftentimes lenders have direct debit options making it easy to have the payments deducted directly from the borrower’s bank account each month. By clarifying the length of the loan, monthly payment amount, methods of payment, and the due date each month one can be sure to never miss a payment.
The easiest way to never miss a payment is to use a loan payment calculator before signing the loan documents. Be sure to calculate what your monthly payments will be and budget accordingly.
Even for people who are certain they are able to pay their loan each month, it is important to find out how many payments can be missed before the collateral vehicle can be repossessed.
Don’t forget to check if there are penalties for early repayment. Even if it’s unlikely the loan will be repaid early, it’s always a good idea to find out if there are hidden penalties.
Can the Borrower Keep Driving Their Car?
Most title loans allow the borrower to continue driving their car while the loan is in repayment, but it is important to read the terms of the loan carefully to make sure.
The lender becomes the lien-holder of the vehicle to guarantee repayment of the loan, but generally the borrower is still in control of the vehicle and all decisions regarding it, including insurance and repairs.
This option makes car title loans convenient without stifling the earning abilities of the borrower. Check with the lender what types of vehicles are available to use as collateral.
Some lenders require the vehicle to be newer than a certain date. Often the lender will require a GPS system to be installed to insure they can find the vehicle in case of non-payment.
Is a Car Title Loan the Right Option?
By doing the research ahead of time and using a loan repayment calculator, the consumer can determine if a car title loan is right for them.
Consider the total sum of money needed and whether it will be easy to pay back according the terms provided by the lender. Considering all these factors will keep you financially secure through the whole process.