Title loans are the perfect solution for customers with bad credit or no credit. They are sometimes referred to as pink slip loans, collateral loans, or auto title loans. It is a type of secured loan that uses the value of your vehicle as collateral to secure the loan for the lender. You can get up to $50,000 with a title loan, however, title loans should typically only be used as a last resort during a financial emergency due to rates being high. The biggest upside to getting a title loan though, is the process is easy. Here is a breakdown of the steps involved in getting a title loan!
Learn about title loans! This is the most important step of them all! (This Article Explains Most Everything!) Learn things like the title loan process, the financial basics of a title loan, and planning for a title loan! Make sure you are educated about something before getting it! This is the most important thing to do before getting any financial product!
Apply for the loan. Provide the lender your application, the title to your vehicle, your car, and your photo ID. The lender will evaluate the wholesale value of your vehicle and determine whether you qualify and how much you are able to receive.
In order to protect themselves, the lender also needs the vehicle to be fully insured throughout the duration of the loan. Shop around for the best and affordable insurance for your vehicle.
If you are approved, the lender will then go over the contract with you and the term agreements for the loan and hand over a check. It is a fairly easy and quick process. Unlike bank loans, there are no lengthy waiting periods or long applications that you have to deal with.
After, the lender will place themselves on the vehicleâ€™s title as a lien holder and keep the title for the duration of the loan. Being a lien holder simply means, that you are not able to sell the vehicle until you have satisfied the loan and if you ever default on the loan the lien holder is also able to take the vehicle as payment.
The payment terms will largely depend on the company you are working with. The normal payment terms are usually from 24 to 36 months. You are able to continue driving the vehicle as long as you are making your payments. This company also does not have any penalties for early repayment, which is always a great advantage with these types of loans and not many other title loan companies offer it. This allows you to pay back the entire balance earlier than your agreed upon terms without any large penalties.
Once the loan is paid back in full, the lender will release the lien on the title. You will then have to go down to the DMV to receive a clean title.
Things to be aware of with a title loan:
These are short term loans which mean they do not have an annual percentage rate, they carry a monthly rate. They are high cost loan which means you will be paying a lot more in interest the longer it takes you to pay it back.
You typically have to go to the title loan stores location, like car title loans Anaheim. This is so they can give you a go over the paperwork, inspect the car, and give you a check!
There are added DMV fees and documentation fees just like any other loan. It cost them money to
handle everything with the DMV and process the application. However, pay attention to how much they are going to be adding on to your loans for these fees.
Like I mentioned before, despite the negative mindset on these types of loans they are great for people with bad credit. They can provide funding quickly and easily. Once the loan is paid in full, they do report it to the credit bureau which will help improve your credit.