Car Title Collateral Loans Information
Filed under Collateral Loans
A car title is a legally binding document that determines you are the owner of a vehicle. The Department of Motor Vehicles (DMV) issues one for every vehicle. When you buy a car, from a dealership or private seller, the title is put in the name of whoever is paying for the car. If you finance your vehicle, then the bank’s name will be on the title until you have repaid the loan. Once that is done, the title is put in your name. This is a ‘clear title’ with no liens (loans) against it. If you are selling a car that still has loan payments, then you might not qualify for title collateral loans. Learn the process on how to start using your car as collateral.
Collateral Loans on Vehicles
When buying a car with collateral, you can use a clear title as collateral for a personal loan. Loan companies will accept a clean car title as collateral for any loans you might need. Collateral is an asset or assets promised as security for a loan. Title loans are usually fairly easy to obtain. There are usually title loan shops in any city or you can go on the Internet and find companies in your area that will allow you to apply for title loans online and then they will send a representative to you to assess your cars value.
Many title loan businesses don’t check your credit and can usually get you a check in less than an hour.
Some companies require full insurance coverage while others don’t deem it terribly important. It is always a good idea to have insurance on your vehicle, most states require it by law.
Some of the documents you will need for a car title collateral loan are:
- Clear title to the car.
- Car registration and insurance card.
- Current utility bill.
- Bank statement.
- Pay stub.
You may also be asked for:
- References from family and friends
- Spare key.
Car title loans are usually for about 50% of the value of the car, as ascertained by the loan company.
Read the fine print very carefully; interest rates can vary from 36%APR to 300%APR or more.
Car title loans are typically for 30 days. If you haven’t repaid the loan by then, you may be able to roll into another 30 day contract. However, borrower: beware. If you can’t pay in 30 days, the car title loan company can legally take your car.
Tags: Car Vehicle Title Loans
How Title Loans Work As Collateral
Filed under Collateral Loans
Title loans are typically short-term plans with high-interest rates, in which the borrower utilizes their vehicle to act as collateral for a loan. In most circumstances, these types of loans have higher interest than other loans because the lender rarely checks borrower’s credit; consideration is based strictly on the value of the vehicle. It usually takes up to fifteen minutes for loans of about one hundred dollars. Normally, financial institutions will not loan more than $1200 to anyone with bad credit because the risks are not worth it. Many lenders will also want to see that the borrower has another source of income.
Main Benefits of Title Loans
- Title loans give quick cash in your hands and that means you can pay off any emergency needs.
- With title loans, you will not be required to have the same documentation as other personal loans. For people in tough situations without any means of cash, employment or credit, a title loan is their only option.
Title Loans Process
The process involved usually entails basing the amount on the collateral loan in question, namely up to about fifty percent of the vehicle’s resale value. The borrower must show proof of the title, which means the car has to be paid entirely, with no financing or liens. In addition, insurance on the vehicle is also essential for some lenders. Depending on where the lender resides, interest rates can range anywhere from 35% to 65%. Schedules for payment vary quite a bit, but in all circumstances, the borrower has to at least pay interest according to the payment plan. When the term is up, the remaining balance may be required in one payment. If at this point the borrower is found unable to pay in full, he or she may be given an option to roll the balance over and formulate a new auto loan. Regulations only allow a certain number of times for the loan to be rolled over, so that the borrower will not remain in debt interminably.
Lastly, a vehicle does not necessarily have to be brand new in order to be useful for a title loan, but it does of course have to contain enough value for the loan in question. Lenders often seek a variety of resources to find out the value of the vehicle. Upon realizing the value of the vehicle, the lender creates a contract for the borrower to sign. It is vital to understand that lenders actually benefit from repossessions and hiked interest rates, as some lenders have actually taken up to 300% more than the loan itself. At this rate, a $1,200 loan would create $600 in interest.
Title loan lenders are required by federal law to disclose their interest rates as an annual percentage rate (APR) and not in a monthly rate. Do not get tricked by gimmicks. It is important to distinguish between these two rates and focus on the APR for your title loans. Once you know your APR, think over once again if a title loan is your only option. These types of loans are truly for those with no other means.