Ten Life-saving Tips About Payday Loans Near Me 550

Documents You’ll Need

Fees and Rates

An example of a title loan

The Bottom Line

Personal Loans, Credit

Car Title Requirements for Loans

By Kimberly Rotter

Updated May 14, 2021

Review by Thomas Brock

The car title loan is a short-term loan that is secured by the car used by the borrower can be used to secure collateral to the debt. Most of the time, consumers do not qualify for other financing alternatives.

If you reside in a state that allows auto title loans (see states that Allow Car Title Loans), here’s how to get one. The borrower must bring the car and necessary paperwork with them to the lending institution. While some title loan applications are on the internet, lenders must to confirm the condition of the vehicle and also the completeness of the paperwork – before they release the money. The lender retains the title to the vehicle and places a lien on it, and gives the money to the borrower.

The loan amount is typically between 25% and 50percent of vehicle’s worth in cash ( The borrower repays the loan with charges and interest, within the time period that is allowed (usually 30-days) and then reclaims the title, lien-free.1

Important Takeaways

Car title loans are secured short-term loans which use the borrower’s car as collateral.

They are associated with subprime lending, as they typically involve high interest rates and borrowers who have poor credit scores. and not all states allow them.

To obtain an auto title loan you’ll have to submit evidence that proves that you’re who you say you are, that you have your own vehicle, you’ve earned a living and have at least two references.

Sometimes, additional steps are necessary to decrease the risk for lenders for default, like installing GPS trackers to the car to assist in potential repossession.

Documents You’ll Be Needing

To qualify for a car title loan which is also known as a pink slip loan typically, the borrower must have ownership of the vehicle in its entirety and there should be no liens attached to the title.1 Lenders also require certain paperwork, including any or any of these:

Original title to vehicle showing sole ownership

Identification issued by the government that matches the name on the title.

Utility bill or any other proof of residency that matches the name on the title

Current registration of the vehicle

Documentation of the insurance company’s coverage for vehicles

Recent pay stubs or other proof of capacity to pay back the loan

Names address, phone numbers and names that are at minimum two valid references

Copies of the vehicle’s keys

Certain lenders will also require some lenders also require a GPS tracking device to be attached to the car, in the event of default and the lender is awarded the right to take possession of the car. Certain devices are designed to permit the lender to disable the vehicle remotely.1

It is not necessary to have good credit to get an auto title loan. In fact, most title-loan lenders won’t look at your credit score at all as the loan is based solely on the resale worth of the vehicle. Also, you don’t need to be employed to be eligible for a title loan.1

Rates and Fees

Car title loans are considerably more expensive than conventional bank loans. The rates of interest differ, however those states in which the interest rate is not capped typically, it is determined at 25% per month, or 300 percent annually.2 This implies that a customer who borrows $1,000 will need to repay $1,250 at the end of the thirty days to avoid default.

Most lenders charge a lien fee. In states in which title lending isn’t controlled, some lenders charge origination fees, document fees key fees, processing fees, or other fees.1 These fees can are often high and could amount to more than of $25 (or more) over charges for the loan or interest charges.3 Be sure to add up all the fees when figuring the total amount to the loan.

(For more information on this subject for more details, check out: Car Title Loan Limits).

Example of a Title Loan

Imagine that Maria has recently lost her job and she has to work to make ends meet to pay rent. In a last-minute solution she opts to take out money through a car title loan against her vehicle which currently has a market worth of $2,500. The loan provider is willing to extend her a car title loan worth $1250.

In the application process, Maria needs to provide proof in the form of a title (that she owns the car) as well as additional documentation. The advertised interest rate was stated as being at 20% over the 30 day length of loan However, Maria did the wrong thing by assuming it was already an annualized rate. The true annualized interest rate (APR) was actually 240%! This is much higher than Maria would have accepted in a heartbeat.

By the end of the one-month term, Maria was required to repay $1,500, significantly higher than the approximately $1,270 she had anticipated. Due to her financial crisis, Maria was unable to find the additional $230 and was obliged to surrender the title to her car.

The Bottom Line

The best applicant for a title car loan is someone who owns a vehicle outright and is aware of the potential expensive cost of the loan and has an expectation of having access to the funds needed to pay off the loan prior to when the repayment time runs out. If there isn’t a clear and realistic plan for paying off the loan the car title loan could result in the sale of the car for only a fraction of the value.

Many borrowers with title loans renew their loans multiple times, which makes the loan much more expensive overall. Therefore the most crucial factor is the capability to repay the loan by the due date.

(For more information, see Getting a Car Title Loan.)

KAS

Ten Life-saving Tips About Payday Loans Near Me 550

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