A brief overview of title loans
A title loan is a secured loan where borrowers are given the option of using their vehicles as a collateral. The borrowers can loan a certain amount in exchange of placing a lien on the car title, which is a form of security interest that is granted against a property. They must temporarily surrender the hard copy of the title of their vehicle to the lender in exchange of the loan amount. Let us know more about title loan through the series of questions listed below:
How does a title loan work?
- Usually referred to as car title loan, it is a small amount of loan given for a short period of time. The borrower must give the lender the title of the vehicle.
- Title loans usually have a repayment time of 30 days.
- The biggest downlow about car title loans is that, if the borrower defaults the loan or cannot repay it completely, the lender can take the borrower’s vehicle in exchange of the defaulted loan.
Are title loans valid in all states across the country?
Because title loans have short terms and lump sum repayments with high annual percentage rates, title loans operate only in half of the country (25 states to be precise). Here is a list of some states that allow to take up title loans.
What is an APR of a title loan?
- An annual percentage rate, APR, measures the actual cost of the loan that the borrower will be paying every year based on the rate of interest.
- Title loans have an average APR of 300 percent which is three times of what the borrower had borrowed in fees and interest rates.
- The way ARP works in title loans is that since they are only a month long and have a around 25 percent monthly interest rate, people who have taken up the loan roll over the payment in exchange for the next month; therefore, the APR keeps on adding up.
What are the requirements to get a title loan?
- The primary requirement to apply for a title loan is that the applicant or the borrower should be at least 18 years and should have a government-issued ID to prove the same.
- The borrower must also have a car title that is lien free in his or her name and should have a source of regular income. The source of income can be anything—from a payroll job to pension, and everything in between (even unemployment benefits can be counted).
- Once the above requirements are fulfilled, the applicant can either apply for a loan in person at a location near by or online through a number of websites.
- The benefit of applying for title loans personally is that the lenders will inspect the car against the loan immediately. And after inspecting the car, the loan professionals would be able to make you an offer.
How does the repayment of the title loans work?
- After you have qualified for the loan and applied for the same. The loan company will present you with a repayment plan.
- Make sure that you know exactly when the loan payments are expected. The repayments can either be made in cash in the nearest branches or through debit card.
- One of the advantages of repaying a title loan is that the borrower can repay the loan in a lump sum amount without getting incurred with repayment penalty.
Which are some of the popular car title loans that can be chosen from?
Based on customer reviews from across the country, here are some of the popular title loans (in no particular order):
- Speedy Cash
- Check Into Cash
- TMG Loan Processing