If you own your vehicle outright or owe very little money on it, then you will have the opportunity to take out a car title loan. Car title loans can offer you quick cash, usually between $100 and $10,000, in exchange for you using your vehicle’s title as collateral. Because this loan is backed by property, a car title loan is considered a type of secured loan, meaning the lender can seize the property as collateral if the debt is not repaid.
Car title loans are often expensive, with hefty fees attached and annual percentage rates frequently passing 260%. While there are alternatives that you should consider first, if you need cash fast and payday loans advance Ohio have no other choice, it’s important to get the best car title loan possible. Read on to find out how car title loans work.
Car Title Loans: Documents You Will Need
In order to obtain a car title loan, you will need to own the vehicle outright and have no current liens against the title. It’s possible to get a loan if you owe very little money on the vehicle, but that may be a little more difficult. These are some of the paperwork that most lenders may require to approve a loan:
- Original vehicle title showing sole ownership
- Government-issued identification that matches the name on the title
- Utility bill or other proof of residency that matches the name on the title
- Current vehicle registration
- Proof of insurance on the vehicle
- Recent pay stubs or other proof of ability to repay a loan
- Names, phone numbers, and addresses of at least two valid personal references
- Working copies of the vehicle’s keys
While the list above is pretty comprehensive as far as what you will need to get a title loan on your car, some lenders ple, some lenders require a GPS tracking device to be attached to the car in the event of the borrower defaulting on the loan and the lender winning the right to repossess the vehicle. Some of these devices are even designed to permit the lender to disable the car remotely. You won’t need good credit to get a title loan, in fact, most title loan lenders do not even check credit. This is because the loan will depend entirely on the resale value of the vehicle and it will be offered as collateral. In addition, employment is usually not required for a title loan for the same reasons.
Interest Rate And Fees That You Should Expect on Car Title Loans
In general, car title loans will be considerably more expensive than traditional bank loans. Interest rates will vary, but in the states where interest rates are not capped, it is typically set at 25% per month or 300% annually. This would mean that a $1,000 loan would cost $1,250 to repay at the end of the 30-day loan term to avoid going into default.
In addition to these high-interest rates, most lenders will charge a lien fee. In the states where title lending is not regulated, some lenders may charge origination fees, document fees, key fees, processing fees, or others.
Questions You Should Ask Before Taking Out A Vehicle Loan
There are going to be a lot of available options for anyone that is looking to take out a loan. Most companies are very eager to give out title loans because they will either get their money back plus interest or seize the vehicle and sell it for a profit. Unlike traditional lenders that are picky about who they are loaning money to, you will have to be the picky one and carefully select the best option for you. These are some of the questions you need to answer before agreeing to any loan.