The cash has all run out, and you need some more before payday. You have heard about title loans, but have never checked them out. Now you are considering getting one. In order to make sure you understand how a title loan works, these details will help you.
Good Credit Not Needed
When you go to apply for a car title loan, you will not likely be asked about your credit score. This means most anyone with a car and a job could apply. Your loan will be based partly on your car’s value, which becomes the collateral for the loan.
Your Title Will Be Surrendered
Since your collateral is based on your car, you will need to give the title loan office your title. Of course, this is if they decide to loan you the money. They will make sure that there are no liens on the car before extending a loan to you.
The Interest Rate Is High
The Federal Trade Commission says that the interest rate is going to be about 25 percent per month. If the loan were taken out at this rate for a year, it means that the consumer would be paying 300 percent in interest!
30-Day Repayment Period Is Standard
Most car title loans are granted for a maximum period of 30 days. This means that you will need to pay it back, with interest, in 30 days or less. If it is not paid back, the title loan lender has the right to repossess your car.
If you do not pay it back in the 30-day period, and your car is taken by the company, it may be sold to pay your bill. In some states, they may keep all the money made from the sale. Only a few states require the difference to be given back to the consumer.
Devices May be Put on Your Car
Many title loan companies will put a GPS device on your car so that they can find it if they need to. In some cases, the device may also disable your car if a payment is not made on time. If this happens, you will most likely need to make a payment equal to the interest to get the car on the road again – if the car is not repossessed.
Things Needed to Get a Title Loan
Getting a title loan is not difficult. Consumer.gov says that you will need to fill out an application first. You will also need to bring your car and the title, and some ID. You will also need to show proof of your address and of employment.
If you need to get a title loan, don’t forget to shop around. Lenders of this type of loan do not all charge the same interest rate, and it may save you some money.