A Car Title Loan: The Answer May be in Your Driveway

Were you aware that one ready source of emergency cash may be sitting right there in your driveway? Did you know that your paid-for car may be just the ticket to get you out of that financial crisis? Yes, your car title may be the only thing required to get the money you need.

A car title loan is a small loan, up to half the value of your car in some cases, using your car title as your collateral. If your car is paid for, or almost paid for, and you have the title, you may be able to borrow the money you need and still keep your car.

To apply for a car title loan, you must be over 18, own your car, and have car insurance. You must also be employed with sufficient income and a low enough debt-to-income ratio to handle the payments. You may also be asked to leave a set of keys to your car with the lender in case you are unable to pay.

Car title loans are usually short-term loans with a term of about 30 days. Occasionally, they can be longer. You can easily apply on the Internet after choosing from among the many lenders online. Check several sites to look for the best deal on interest rates and fees. Once you apply, your loan can be approved within hours and you can have the money directly deposited into your bank account immediately.

When the loan term is over, you will be expected to make a balloon payment of the full amount borrowed plus interest and fees. Lenders require a variety of fees and interest rates so be sure to do some comparison shopping. You want the lowest interest rate and the fewest fees possible. When you find a lender, be sure to double check what you will be charged and get everything spelled out in writing before you sign.

Once you?ve agreed on terms, your car title loan will be drawn up. One of the papers you will sign is a lien, giving the lender interest in your car. If you can?t pay the loan, and have exhausted all the rollover and other debt relief options, the lender will have the right to come and take your car. Once this happens, the car can be sold, and the lender can keep any profit. Even if the car sells for more than you owe, you will not have a right to any of the money. So before you get a car title loan, make sure you can make the payments or, should the worst happen, that you can get to work or school without a car.

Interest rates on car title loans vary from state to state, and in some states, this type of loan is strictly regulated. Some states have a maximum APR of around 36 percent, or 3 percent per month. Others have no limits. Make sure you?ve checked the laws in your state and know exactly how much the loan is going to cost you. Your credit score can affect how much interest you are asked to pay.

In order to get a car title loan, your car should be in generally good condition, run well, and have no major body damage. Some lenders require that the car be less than10 years old. If you?ve lost the title you may still be able to get a loan. Your lender can help you apply for a new title. Even if you don?t have the actual title because you just bought the car, the old title, with the seller?s signature on it transferring ownership to you, may be enough.

Once you?ve signed for a car title loan, it?s important to budget carefully to make sure you can pay for the loan in the time allotted. Since this is normally a month, don?t borrow more than you can comfortably pay back. Don?t be tempted to get ?just a little extra for fun? because not having your car should it be repossessed will not be fun. Generally, you will have a three-day grace period before additional late fees are applied to the loan.

If something happens, and you can?t repay your car title loan within the term of the loan, make sure you contact the lender as soon as you realize you?re going to have trouble paying. The lender may be able to roll the loan over into another loan, but you may be charged a higher interest rate on the new loan.

Most car title loans have no prepayment penalties, so it?s to your advantage to pay the loan off as soon as you can. If you pay the loan after five days, you will only be charged five days of interest. If you know you?ll be able to pay quickly, and in full, a car title loan may be a good option in an emergency.