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Whether we like it or not, unexpected emergencies happen. In most cases, unforeseen events take a toll on our finances. Whether it’s for a doctor’s bill or an surprise expense, a title loan can help pay for it. Here are some important things that you need to know about title loans.
A title loan, also known as a title pawn, is a type of secure loan where a lender puts a lien on a borrower’s property, their car in this case, in exchange for an amount to be loaned. Once the loan is repaid, the lien is removed and the title is given back to the borrower. However, if the borrower is unable to pay the debt in full, the lender can repossess the property and sell it to recoup the borrower’s outstanding debt.
In most cases, title loans are short-term and they tend to have higher interest rates compared to other types of loans. Typically, lenders do not require the borrower’s credit history, but consider the value of the property that is being used as collateral to determine whether or not they’ll approve the loan.
There are requirements that you have to secure or pass if you want to apply for a title loan. Before doing so, however, make sure you are doing business with a reputable financial institution. At the same time, secure a copy of their terms and agreements so you can review their policies (IN DETAIL) before signing the dotted line.
The fastest way to find a title loan is by doing an online search. Narrow down your list by identifying the companies that have branches or stores closest to where you live and balance it by seeing which company provides the better rate.
One of the best benefits of getting a title loan is that you get to collect the money almost immediately after approval. Most financial institutions process loan applications within only a day or two. Unlike other types of loans that require a much more complicated process, title loans only involve assessing the value of the vehicle that is being used as collateral. Lenders weigh whether or not the property is worth the amount of money being borrowed.
Anyone who has property can apply for a title loan. Since there is no credit history check required and there is virtually no risk for the lender, the approval rates are (normally) quite high. This means that this type of loan is perfect for borrowers with bad credit.
Other benefits usually depend on the package being offered by the lender. For example, some allow borrowers to still drive their cars and all they have to hand over are a spare set of keys and the title.
If you have an asset you can use as collateral, a title loan is good for emergency funds. The operative word being “emergency”. If you’re looking to have some extra spending money or buy a non-essential item, look at other types of loans. You can also rely on title loans if you are not ready to sell an asset.
Different companies may have their own application process. However, you can expect it to be simpler and less complicated compared to other unsecured loans. Generally, here is what you need to do:
There are a couple of assets you can use as collateral if you wish to apply for title loans. This includes your home, car, or savings. Most companies are happy to do business in exchange for your vehicle’s title.
Many borrowers fear that they may not be able to recover their assets if they take out a title loan. While there is always that risk, you will manage by considering the pros and cons beforehand. If you have a choice, you may also consider using an asset that you can afford to lose.
For collateral-based loans, the national average for a single asset is $150. However, this amount increases depending on the value of the property and the amount of money you wish to take out.
Different banks, pawns, and financial institutions accept various modes of repayment. It also varies depending on your area and the type of title loan you secured.
Make sure you check the terms and agreements of their repayment policies as they differ from lender to lender. Most companies, however, allow cash or credit payments while others allow online processing.
Again, this varies depending on your area and the product. However, repayment generally starts once the funds you borrowed are completely disbursed.
Talk to your lender about your repayment schedule and make sure you know when your first repayment is due. At the same time, find out about the amount you have to pay each time and the frequency of repayment.
There are different repayment plans that you can get from your lender. Some companies allow early payments without additional fees, while others do.
There is no set amount for early repayment, however, it is usually equal to one or two months’ worth of interest. The earlier you wish to repay the loan, the more charges you have to pay.
This depends on the company and the type of collateral. While you may have a result in as fast as 30 minutes, there are instances when you get the loan within a day or two.
Title loans are based on the collateral’s value rather than your credit history. While some companies may still request your credit record, this document does not bear any effect on whether the loan is approved or not.
Yes. Your vehicle (and the title by proxy) serves as your collateral and it should have your name listed as the legal owner for it to be eligible. For titles with co-owners, you can check with the company whether they require the other person to be with you or not when you apply for the loan.
This means that if your vehicle is your collateral, you can still get to keep it and use it.
Different states have different policies when it comes to securing a title. It also depends on the type of property you wish to secure the title for. Generally, you can process title duplicates or replacements by mail, online, or in person.
Yes. Title loans are perfect for people with bad credit since the main factor for approval is the asset and not your credit history.
Although your choices are limited, you can still get a loan after declaring bankruptcy. Talk to your lender about your options and see if any of it works for your financial situation.
Once the amount due on your account has been cleared, you can get your title back. Ask your lender about this information and see to it you agree with the arrangement.
Your title loan can be used for all kinds of financial needs. In case of emergency, it is a fast way of securing money. At the same time, you do not have to process documents unlike when you apply for unsecured loans. The best part about it all is you get to continue using your property until the repayment schedule.
While it is good to get a title loan, it is important to consider how you’re going to pay it before putting your property on the line. Unless you’re okay with (possibly) having your property repossessed, you have to think of an exit strategy the moment you decide to get a title loan.
It is important that you remember how many people have lost their assets in the past because they were unable to pay back the loan. So factor everything in before you sign up an agreement. Calculate the total amount owed, check the payment schedule, and know the company’s policies.
Finally, consider if this is really what you need. Check your options if you have any and see if the interest and other charges for a title loan are worth it. Most importantly, deal only with reputable companies. See to it the company won’t rip you off the first chance they get. Do your research and ask questions if you have to. Remember that your financial future depends on the choices you make today.