Tips for Taking out a Car Title Loan


While cash advance and payday loans have been around for quite some time, a new loan type that has made a huge difference for millions of people is the car title loan. In the past several years, the car title loan has proven to be very helpful for many circumstances. When situations arise and money is needed, sometimes coming up with a viable solution is hard but with a loan such as this, securing funds has never been easier. Because of this, these types of loans have become popular throughout the country.

However, before a person goes to just any lender for a car title loan, he or she should understand what this type of loan is and what to look for when choosing the right lending company. That way, the loan is set up the right way from the beginning, meaning the applicant is working with a true professional so that the largest amount of money can be borrowed and for the lowest interest rate.

A common mistake that people make when looking at a car title loan is working from a position of panic. In other words, when money is needed urgently for a dire situation people often run out to the first lender they can find. Unfortunately, this means they might get the car title loan but end up paying a much higher interest rate and other administration fees. Therefore, if possible, a person needing a loan such as this should take a little time to research both brick and mortar, and online lenders to choose the best.

The great thing about a car title loan is that instead of spending an hour completing a complicated application, providing all types of supporting documentation, and then waiting days to find out if the money was even approved as with a conventional loan, people are approved fast, often in as little as 30 minutes. The application process is brief and supporting documents limited. Therefore, someone needing money quickly has it.

To make the process easy and successful, people should consider certain aspects of the car title loan. For starters, the individual must have a clear title, whether for a car, truck, or van. This means no liens are on the title and that the person has the actual paper title in his or her possession. The reason is that the lender for the car title loan will use the clear title as collateral, holding onto it until such time that the loan has been repaid in full.

Additionally, the amount of money that a person can borrow on a car title loan is based on the value of the vehicle. The money being borrowed is against the value, which means the maximum amount of the loan would be up to the highest amount for the resale value. Therefore, if the person?s car is a newer model and in great condition, the amount of money for the loan would be greater than on an older vehicle and one in less than perfect condition.

The purpose for the car title loan is not important to the lender. While there are various reasons that a person would need to take out a loan such as this, the lender does not care how the money would be spent. For this reason, people use this type of loan for emergencies, college expenses, clothes shopping, vacation, having a car repaired, doing home improvement, buying Christmas gifts, taking care of overdue bills, paying off high interest credit cards, and more. The only thing the lender cares about is that the applicant has a clear title and pays the loan back on time and as agreed.

Another consideration for a car title loan is that this is a short-term solution. People interested in taking out this kind of loan need to understand that the loan structure is not intended to be long-term but as a short answer to a problem. Typically, a loan such as this would go for two weeks although there are some lenders that offer a car title loan with a repayment schedule of 15 to 30 days.

However, if for any reason the borrower needs to extend the length of the loan, a reputable lender would be willing to modify the loan, thus pushing the payoff date out. Even so, the borrower might be required to pay additional fees so this should be understood before extending the loan. In some cases, this rollover rate could be higher than it would be worth.

The reason is that each time the loan is pushed out to a further payoff date, the rate of interest goes up. Therefore, while a car title loan is certainly beneficial for many situations, the goal should be for the borrower to have the loan paid off as scheduled, thus avoiding spending more money than needed.