Auto title loans, also called pink slip or pledge pawn loans, are short-term loans that you are expected to use your car title as collateral. These loans are usually expensive and the APR can be up to a triple digit. With this kind of loan, you risk losing your car if you do not pay the loan on time. The loan term usually ranges from 15 to 30 days.
Title lenders usually operate online or out of storefronts. When you apply online, you will need to complete an online form. You will be asked to submit your basic information including your name, contact information, employment details, and your car information.The lender will then give you a list of title loan stores close to you. You will need to submit your car title, a clear photo ID, and proof of insurance to apply. Some lenders will also ask you to submit a duplicate of the car keys to the lender.
When you apply for a title loan, there are certain things you must do to get the best loan option.
You must receive the terms of the loan in writing before you sign for the loan. The Truth In Lending Act mandates lenders to tell borrower about the cost of the loan before the lenders make a final decision. The lender must tell you about the cost of the loan in dollars and also tell you the APR. The APR will include the loan rates and fees such as origination fees, document fees, lien fees, title charges, processing fees, and late fees. You must know all these and then you can review the loan to see if it fits your needs.
You should also be cautious of “add-ons” since they can significantly increase the cost of the loan. Add-ons include vehicle roadside service plan. You should consider the add-ons when you are making a final decision on the loan.
Once you get approved for a title loan, the lender will take your car title and you can only get it back when you finish repaying the loan. You should note that title loans are expensive. There are three main payment options for loan payments. You can pay in person, pay online, or pay via automatic repayment system.
If you are unable to repay the loan before the due date, the lender will need to roll over the loan. The rollover process will attract new fees and interest rates. If you are able to pay by the end of the next due date, you are good to go. If not, you risk getting trapped in a vicious debt cycle. You may even end up paying an interest rate that is higher than the amount you borrowed.
The good thing about title loans is that you can still use your car even when you use it to get a loan. You can use it for work or school or whatever you usually use it for. You may, however, be required to use install GPS devices to track the vehicle. The lender will want to have some amount of control over the car even while you are using it.
If you are unable to make payments, the lender will seize the car. They can sell it to cover their loan amount. Some States force lenders to take the worth of the loan from the sale of the car and return the rest to you. Some lenders can also keep the full amount because the State does not force them to share the money.
Even if you are worried about not getting the credit due to your bad credit score, you should check the numerous options online. There are several loan packages for people with poor credit. At least you do not risk losing your car or any property when you get this loan. You should note that the rates on this loan are high. The application process is as simple as that of title loans.
You can opt for a loan from your family and friends when you need urgent cash. This loan does not come with fees. it is important to tell your lender exactly when you can pay back the loan so that they also do not get disappointed when you are unable to repay the loan on time.
If you are getting the loan because you fall back on your loan payments, you can enroll in overdraft protection. This prevents you from getting credit problems later.
You can get better lending options if you get a co-signer to sign for your loan. If you have bad credit but still want to get a loan with good rates, you can let someone with a good credit score be your guarantor.
Since you risk losing your car when you get a title loan, it is important to consider several other options before you opt for it. It should be your last resort unless you are really certain that you can pay back the loan on time. You should also read the lender’s terms and conditions so that you will know exactly what you are signing up for.