What is a title loan? How easy are they to get approved? Do you qualify for one? A quick rundown of the title loan basics will answer all your questions, and give you a better idea if one will be right for your financial situation.
Title Loan Basics
What is a Title Loan?
A title loan is a secured loan issued by a lender, that uses your car or truck as collateral. The amount of the title loan will vary depending on 1) the value of your vehicle and 2) which lender you use.
Based on the age, make, model, and condition of your car a value will be assigned to it. The title loan will be a percentage of that value.
Once approved, you turn over your car or truck title to the lender. You retain possession of your vehicle, only leaving the legal paperwork with the business. Once the loan has been repaid, the lender will return the title to you.
What Do I Need for Approval?
First and foremost, you need the legal title for that vehicle. It needs to be in your name, and not registered to a third party. Finally, it needs to be full paid off.
If you have that title, it’s really just matter of how much you qualify for.
How Long is the Loan Term?
This will also vary from lender to lender, with some requiring repayment in as little as 30 days. Other lenders, like PR Title Loan, have extended terms of up to 15 months.
What are the Benefits?
Title loans are an excellent source of emergency funding for people who do not have credit. Since the loan is based on your collateral and not your credit score, it is often times an option for people who have very few options.
Also, title loans have a rapid turnaround time. You can be approved and have your funds the same say you apply.
What are the Drawbacks?
Title loans have higher interest rates than bank loans.
Since you are securing the loan with your vehicle, you risk losing it if you stop paying the loan.
If you have any other questions about title loan basics, don’t hesitate to call our offices today!