If you have ever attempted to apply for a traditional loan, you know how complicated the process can be. Sometimes, you need cash immediately to pay for bills or unforeseen expenses. If applying for a bank loan is not an option for you, a title loan can be a great way to access a substantial amount of money fast.
Here's what you need to know about securing a loan using your car title.
Title Loan Basics
A car title loan is a type of loan you can obtain against the title of your paid-for car. While each lender will have their own requirements, generally you will need to present your vehicle, vehicle title, identification, and evidence of income.
Identification can be any form of government-issued ID including state ID or driver's license. You may also need to provide proof of your address by presenting copies of your most recent utility bills.
Proof of income could include pay slips, pension, and any other source of income to demonstrate your ability to repay the loan.
Title Loan Value
To obtain a loan against your car title, you must own the car and the car must not have any outstanding liens. Your lender will evaluate the value of your car to determine how much to lend you.
Several factors may affect the value of your car including the vehicle model, the age of the vehicle, and condition of the vehicle. Other factors include your monthly income and outstanding liens such as a mortgage.
Lenders commonly refer to resources such as Edmund's, Carfax, and the Kelly Blue Book among others to calculate the loan value on a used car.
Title Loan Terms
If you meet all the requirements and your lender approves your title loan, you can access the money, usually in the form of a check, immediately. Bear in mind that the lender will keep the hard copy of your title for the duration of the loan.
Before taking out a title loan, be sure to fully understand the terms of the loan.
Annual Percentage Rate
Ask your lender about the annual percentage rate of charge (APR). The APR is the compounded interest your loan amount accrues per year, expressed in percentage points. Finding out about the APR will help you understand the total cost of the title loan.
Inquire about all the fees related to the loans. Find out when and how much you need to pay toward completing the loan amount. Be sure to work with a reputable lender with a transparent and easy-to-understand fee structure.
Find out how long you have to repay the loan. Ask about any penalties for late repayment. Try to pay your title loan on time to avoid potential late repayment penalties. At the same time, inquire about early repayment penalties.
In addition to penalties, ask your lender about the consequences of non-repayment. Ideally, you should be able to repay your loan on time. However, find out about the implications of late payment or non-repayment to determine if you are ready for a title loan.
Borrowing much-needed cash against your car can help you get back on track. Title loans are, however, not the same - be sure to find a reputable local lender who will offer you amicable repayment terms for your loan.
At American Pawn, we help you get the money you need to sustain you until payday. We give you a generous repayment period of up to three months to ensure that your loan is as stress-free as possible. If you are looking for a trustworthy pawnshop in Baton Rouge, LA, call us at your time of need.