Car title loans can be a lifeline for people who have equity in their Vehicle but no other credit. Like other debt instruments, they need to be used only when absolutely necessary and with caution. A car title Loan is a way of getting cash fast for unplanned expenses, emergencies, medical bills, and anything else. Car Title Loans are secured loans, meaning they are secured with your vehicle as collateral. Most title lenders do not check your credit and instead use your vehicle to determine how much you can borrow. This makes them one of the easiest loans to qualify for.

Title Lenders generally use the Black Book value of your vehicle (not Kelley Blue Book) to determine the value of your vehicle for the loan. They also perform a brief appraisal to confirm the condition. For online title loans, you may be required to take the vehicle to have it inspected by a third party, make sure you check with your lender to find out if that is one of their requirements.

Car title loans are designed to be short term solutions to meet your immediate financial needs. Understanding the associated costs and risks, and especially how title loan interest works, will help you decide if one is right for you. This will also help you prioritize payments to make sure you pay the least amount of interest possible.

Title Loan Collateral

When you get a car title loan you are pledging your vehicle as collateral for the loan (not just the vehicle title). You can continue to use and drive the vehicle, just as you would with any other car loan. However, if you default on the loan, the lender may repossess your vehicle to recover their costs. Depending on the state you live in they may also keep any proceeds from the sale of the vehicle. Some states require the lender to return excess proceeds from the sale of your vehicle, although some do not. Check the title loan laws in your state.

Most lenders, including us, do not check borrowers’ credit scores. The vehicle itself is your credit and when combined with your ability to repay the loan is how we determine the loan amount. Not all lenders require proof of income, make sure to check with your lender. We have always required proof of income, it does not do anyone any good to make a loan that cannot be repaid.

Types of Title Loans:

Car Title Loans are regulated at the state level and are not available in every state. There are two general types of title loans; single payment loans and monthly term loans. These loans are structured very differently and it is important to understand the differences.

Single Payment Title Loans:

Some states have single payment car title loans. These loans work similar to payday loans in that you borrow a fixed amount and repay the entire loan plus a fee at the end of the loan period. They are for a very short period of time, generally 30 days. You must repay the entire loan in one lump sum plus any fees. These types of loans are available in Alabama, Georgia, Idaho, Missouri, Nevada, New Hampshire, and New Mexico. Most of these allow you rollover or extend the loan, which can cause the fees to add up quickly. For single payment title loans make sure you can repay the full amount by the due date to avoid getting caught in a cycle of rolling over the loan without reducing the principal.

Monthly Term Loans

The other type of title loan is a monthly term loan. Some states took notice of the difficulty single payment loans caused borrowers and took action to make the loans easier to repay. Monthly term loans consist of equal monthly payments of principle and interest over a period of usually 4 – 12 months. This means a portion of every payment is applied to the principal of the loan. These loans tend to give the borrower more flexibility by providing more time to repay the full amount. Still, borrowers should make sure they can at least make the minimum payment each month to avoid the consequences of a missed payment. States that offer monthly term loans include Arizona, Illinois, Texas, Virginia, and Wisconsin.

Interest Rates

What are title loan interest rates? There is no simple answer to this question as rates vary from state to state and lender to lender. Some are as high as 300% APR. Title loan interest is usually quoted as a Monthly Rate because the APR is so high. 20% per month sounds OK but it is actually 240% APR.

Make sure to do a bit of research and shop around when looking for a title loan. Interest rates can vary widely from lender to lender and even vary within a lender depending on the size if your loan. Take your time and find a lender with a reasonable rate and a payment plan you can afford.

Fast Title Lenders Title Loans

Fast Title Lenders provides an alternative to the title lenders charging very high triple digit interest rates. We provide car title loans at 8% per month with no fees. This is a fraction of what the larger lenders charge. We also provide a title loan calculator on our site that provides a real time quote with our interest charges broken out my month and the total for the loan.

What is needed for a Car Title Loan?

To get a title loan you will need at a minimum a vehicle with some equity in it, a valid drivers license, and a lien free title. Depending on the lender there may be some additional requirements. Some lenders require proof of insurance, proof of residence, and proof of income. This is usually all you need for a car title loan although we have seen some lenders also require a spare key in some states. A lender may require a GPS device be added to your vehicle.

How much will a Title Loan give you?

A Title Loan is unique in that the amount you can borrow is directly dependent on the vehicle. The amount you can get from a title loan is directly dependent on your vehicle’s value. Vehicle values can vary quite a but depending on mileage, condition, and history. For example, a 2010 Mercedes ML550 with 60K miles in excellent condition can be worth almost twice as much as the same vehicle with 150K miles in fair condition.

Vehicle history also plays a big role in your vehicles value. The number of owners, accidents, salvage history, rental use, and other information available in a vehicle history report will have an affect on your vehicle’s value. You can get a history report from Carfax or Autocheck for a fee, or find out how to get a free vehicle history report. Use the information to find out what your car is really worth to get an idea of how much you will be able to borrow.

Conclusion:

When used responsibly title loans can be a source of quick cash for emergencies to get you out of a jamb. Title Loans work differently depending on what state you live but they all are loans using your vehicle as collateral. It is important to do your research first and make sure you are dealing with a reputable title lender. Find out your costs before signing the loan agreement and make sure to only borrow what you can afford to repay.

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