What to Look for in a Car Title Loan


For anyone in urgent need of money, rather than stress and feel there are no solutions, a car title loan might be the perfect answer. As long as the individual has a clear car title, this type of loan is possible. Although considered a secured loan in that the lender holds onto the title as collateral until the loan has been paid in full, the borrower does not give up possession of the vehicle. This means the money is lent using the title but the person can still drive anywhere he or she wants in that the car title loan company does not hold the actual car.

People need to keep in mind that a car title loan is designed to be a short-term solution. Typically, a loan such as this would be set up for about two weeks although if the borrower were to run into a problem paying the loan back on time, the lender would work with him or her with an extension. Now, when looking at options for a car title loan, people need to consider this scenario and look for lenders that offer extensions if needed but for a decent rate. The interest rate in this case would likely increase so people need to know what the initial rate is and how much it would increase if the loan had to be extended.

Since a car title loan is based on the Annual Percentage Rate or APR, interest rates are usually much higher than that of a conventional loan. However, for the person that has no or bad credit and someone that needs money fast, often within 30 minutes, sometimes paying the higher interest rate is a good trade-off. Again, if possible, anyone interested in a car title loan should check a number of lenders to include local brick and mortar lenders to online lenders to find the lowest rate available.

Regarding initial interest rate, this would be another important aspect of a car title loan. While these loans are government backed, meaning lenders cannot simply start charging whatever they want, there are still some differences in interest rates between lenders. For this reason, anyone considering a car title loan should take time if possible to review two to four lenders to see what rate is charged, as well as any additional fees. While the varied rates might not be significant, it could be enough to make a difference regarding the lender chosen.

Another consideration for someone thinking about taking out a car title loan is the amount of money needing to be borrowed. This dollar figure would be based on a variety of factors such as the age and condition of the car, as well as the geographic location of the applicant. In most cases, lenders of a car title loan would offer the applicant anywhere from $200 to $2,500 but again, this would depend on varying factors. Therefore, if an individual needed the higher amount, it would be worth talking to a number of car title loan lenders to find the one that would provide the most money but also at the lowest interest rate.

The only real difference between a payday loan and car title loan is the car title being used as collateral instead of a person?s paycheck or bank account. The bottom line is that a car title loan offers a number of benefits but the applicant has the right and responsibility to conduct research to find the best lender. One of the great things about a loan such as this is that the lender could care less how the money is spent. Additionally, because this type of loan does not typically exceed $2,500 and the lender has the car title for collateral, even people with horrible credit would be approved in that no credit report is required.

With a car title loan, a person could pay off past due utility bills, perhaps utilities getting ready to be shut off, pay past due credit card bills, take care of a medical emergency, help a child out with college tuition or books, have repairs done on the car, complete a home improvement project, or even take a much-needed vacation. While the money would need to be paid off within the scheduled timeframe, a person with decent income would have no problem.

The entire concept of a car title loan is to provide a person with money fast and on a loan contract created for short-term payoff. Therefore, if a person understands the concept behind a loan like this and the individual completes the necessary research, finding a reputable car title loan lending company would be easy and the outcome positive. A common mistake seen among people looking for a car title loan is choosing the first car title loan company they come across, which often means being locked into a high interest rate and processing fees. For this reason, talking to several lenders is a much better option, one that could save the applicant tremendous money.