Car title loans are a pretty popular way of borrowing money, but a lot of people don’t know much about them. These are some of the main things that you might want to know about these loans.
1. You Have to Own Your Own Vehicle
Because this type of loan requires that you use your car’s title as collateral, you are required to be a vehicle owner in order to take out one of these loans. You also cannot owe money to a car lender or anyone else who has a lien on the title. Instead, you must own your car outright and have the title in hand. If you do own your car outright but do not have the title in possession, you will probably need to work with your state’s Department of Motor Vehicles so that you can get a copy.
2. It’s a Regulated Industry
The car title loan industry is a heavily regulated industry. In states where these loans are legal, there are often limits in place about how much you can borrow or how much you can be charged in interest. Also, since your car can be repossessed by the loan company in the event that you do not make your payments, many states have laws in place about the process that has to be taken by the loan company before this can actually happen. For many people, knowing that there are regulations in place can be comforting.
3. The Amount You Can Borrow is Based Off of the Value of Your Car
Different lenders look at different things when determining how much money to loan someone. In many cases, your income is taken into consideration. For example, a payday lender will generally only loan you an amount that you will be able to pay back on your next payday.
For those who just need to borrow a small amount of money, this might not be a problem. For those who are facing a bigger financial issue and who need to borrow more, however, it can be an issue. The good thing about a car title loan is the fact that the lender will generally look more at the value of your car than anything else when determining how much you can borrow. Therefore, if you’d like to take out a bigger loan, you might be able to do so if your car is valuable enough to serve as collateral for that loan.
4. Getting Approved Usually Isn’t Difficult
One thing that a lot of people love about car title loans is the fact that it can be much easier to get approved for one of these loans than many of the other types of loans that are out there. If you’re like many people, you might have found that applying for loans can be a huge hassle. In many cases, you have to worry about having a high enough credit score and not having any negative entries on your credit report. Additionally, you might have to provide proof of your income and proof that you have had your job for a certain amount of time. Because of these strict requirements, a lot of people find that it’s tough for them to get approved for loans.
This is one reason why a lot of people turn to title loans. Even though the lender might have some requirements in regards to your income, title lenders usually look more at the value of the car that you are planning on using as collateral than at your income and credit score. These loans make it possible for people who have bad credit or who haven’t had their job very long to borrow money when they otherwise would not have been able to do so.
Borrowing money is always something that should be taken seriously. It’s never a good idea to jump into any type of loan situation without really weighing out the pros and cons and making sure that you do your research. However, for many people who are looking to borrow money, car title loans provide a great opportunity for doing so. Therefore, this might be something that you will want to look into if you’re in a pinch and need to borrow some cash.