Getting a Title Loan Online
Like other types of payday advance loans, a car title loan is a short-term loan. This simply means that the loan is meant to be fully repaid within a very short period of time (usually 30 days). However, a car title loan is a secured loan. In order to get a car title loan, you must offer your personal vehicle as collateral. If you are unable to repay the loan when it is due, the lender has the legal right to repossess your car.
Most financial experts and consumer advocates consider car title loans a form of predatory lending. This is due to the fact that car title loans have unreasonably high interest rates and fees. Car title loan lenders (as well as payday advance lenders) frequently target consumers who have poor credit. Since the lenders are protected from loss by having the borrower's car as collateral for the loan, most do not perform credit checks and many do not require proof of income.
Often, borrowers who need quick access to cash funds are stressed to the point that good judgment is tossed aside in the rush to obtain much-needed money. Car title lenders are aware of this and many times approve car title loans for individuals who clearly do not have the income resources to successfully repay the loan. This is one of the reasons that car title loans pose such a high-risk to consumers, especially those who are economically vulnerable.
It is in your best interest to avoid short-term loans altogether. But if you truly have no other option for finding emergency cash funds, there are some things you should consider before committing to a car title loan.
Getting the Best Rate
Here are some ideas to consider before making the final decision about a car title loan. Always be cautious when borrowing and protect yourself from costly mistakes.
Compare Interest Rates - Contact different car title loan companies and compare rates. Car title loans always come with a high interest rate (often as much as 30% monthly). This means that a $500 loan will cost you $150 in interest charges over a 30 day period. To fully repay the loan, you will need to have $650 in just four short weeks.
Focus on Repayment - You need to be certain that you will have the funds to repay your loan when it is due. Each time you extend your loan for another 30 days, you are adding on more interest charges and fees. This can start a domino effect with your overall finances and cause deeper financial hardship. Always remember that if you are unable to repay your loan, the lender will repossess your vehicle and sell it to recover the money you owe. You will not only lose the money which you have paid on the loan but will also lose the car itself.
Search for Reputable Companies - Do some research on car title lenders and only deal with reputable companies. Check with your local Better Business Bureau to see about possible complaints or lawsuits against certain lenders. It is your responsibility to protect yourself from unscrupulous lenders.
Avoid Monthly Payments - Your goal should be to pay off your loan at the end of the initial 30 day repayment period. Many lenders will push low monthly payments on potential customers as a good alternative- never mentioning that this practice can cost borrowers thousands of dollars in interest and keep them in an unending cycle of debt. If you know you will have to extend your loan, be certain that you understand the interest rates and how they will be applied to your loan.
Know What You Are Signing - It is your responsibility to read and understand the car title loan agreement. The terms and conditions of your loan should be given to you in writing before you are asked to sign any paperwork. If you have concerns about your ability to repay your car title loan or feel you are being pressured to make a quick decision, walk away.
Don't Make a Hasty Decision - Seriously consider your personal financial situation before committing to a car title loan. Will taking on this new loan push you deeper into debt? Can you risk losing your car and having no means of transportation? Be honest with yourself. The last thing you want to do is make a bad situation worse.
How To Get a Car Title Loan
Online car title loan websites all have their own application forms. But the actual process and required information are very similar no matter which lender you choose. Here is the basic information which you will need to submit:
Your personal information - Usually this is your name, address and contact telephone numbers. Not all lenders require proof of income.
Your vehicle information - This will include the make, model, color, mileage, and VIN.
Your auto insurance information - The lender may determine that more insurance coverage is needed while they control the title. This varies among lenders and the borrower's specific situation.
Next, you need to submit the completed form. You will also have to provide the title to your vehicle. There cannot be any liens against your car and it must be fully paid off.
Once you have taken these steps, you just have to wait. If the website you are using also has an actual store (physical location) you will be contacted by either email or phone and told how to proceed. Sometimes everything can be done online but occasionally customers are asked to go to the store location to drop off the title and also a set of keys to the vehicle.
The entire process usually takes about an hour. Car title loan lenders do not run routine credit checks since any loan they approve is secured by the vehicle. There really is no risk to the lender. Car title loans are generally given for around 50% of the wholesale value of the car, as a maximum. Borrowers can normally request between $100 and $5000.
It is important that you fully understand the risks involved with car title loans. Some statistics estimate that 1 out of every 8 vehicles used as collateral for a loan are repossessed by lenders. Thirty days is a very short amount of time in which to repay a car title loan. Remember that if you default on your loan, the lender will then own it and can sell it to recover the money you owe. Even if your vehicle sells for more than the amount of your loan, the lender is entitled to keep all the profits.
Potential Problems to Avoid
Consumers can run into potential problems when getting an online car title loan. Here are some of the more common ones and how you can avoid them.
Too much personal data. Many times car title loan lenders collect a wealth of personal information (more than they need) and then use it for marketing or give it to a third party. Car title loans are a secured debt. There should be no reason for a lender to ask for proof of income or your credit history.
No listing of terms and conditions. Many websites show enticing pictures of stacks of cash and people smiling. No mention is ever made of the extremely high interest rates that lenders charge for a car title loan or the fact that you will lose your vehicle if you are unable to repay your loan. Don't be fooled by these tactics. Make sure that you understand the terms and conditions and have it all in writing before signing a loan agreement.
Evaluation of vehicles. Most car title loan lenders give about 40%-50% of the wholesale value of the vehicle being used as collateral. But many websites fail to give a specific percentage. Be sure you know how much they will assign to your title if you agree to the loan.
Poor customer service. This is where patience and research pays off. Many online car title websites don't give much thought to providing good customer service. They are simply hoping to get unwary and cash-strapped consumers to sign on the dotted line without asking any questions. Car title loans are high-risk and expensive! Be alert to companies with shady business practices and avoid dealing with them.
Always borrow responsibly!