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Emergencies in life will always catch us off guard and the only thing you can do about it is to be prepared when that time comes. But the question is, how well are you prepared? Some emergencies may not be life threatening, but it can be very expensive. Be it a medical bill, your car broke down, student loans, or any financial emergency, then a cart title loan will definitely be of help to you.
A car title loan, also known as a title pawn loan, can come in clutch and bail you out during hard times, it can be a good source of funding during desperate times when you can’t think of any other way.
A car title loan often is a very quick process; you can even process it online for your convenience without having to leave the comforts of your own. And as quick as one business day, you can receive your funding. If you don’t have any idea how a car title loan works and what are the requirements, we’ll be talking about it in this article.
Let’s start with:
What is a Car Title Loan?
If you are really desperate for funds to deal with an emergency situation, a car title loan would bail you out, provided that you have a car with a clean title. A car title loan is a kind of short-term loan in which you offer a clean title of your car as a collateral for the loan. In short, it’s a secured loan.
How it works and the application process is simple, you take whatever relevant document that is required of you by the lender and present it to them in their office, but if you take the online route, you only need to scan the documents and won’t take much paperwork.
Once that’s done, if you’re applying online, lenders would then ask you for pictures to assess the condition of your car, and once that’s done and all the paperwork have been filed, all you need now is the approval of your loan. And for the duration of that loan, the title of your car will remain with the lender.
One good thing about a car title loan is that even though you’ve loan the title of your car, the car remains with you and you can still use it, as some depends on their vehicles to function and go to work, and lenders don’t want that as they won’t get repaid. Depending on the condition of your car, you will get somewhere around 20%-50% of the value estimated of your car. After you’ve paid your debt off, the title then gets transferred back to you.
One of the best loans you can get online is a car title loan, it’s less of a hassle compared to going to a physical office, and you can get your funds in about 24 hours, and just like a personal loan, it’s up to your discretion on how you use the funds – there are no limitations.
Documents for a car title loan
There are quite a handful of documents needed for a car title loan, also known as a pink slip or a car pawn, but there’s nothing more important than a vehicle that is on your name and has a clean title. On top of that, you need the other documents as well such as the following:
• Original and clean title of the vehicle stating that you are the owner.
• A government ID
• Vehicle insurance
• Must be a US resident or proof of residency for that matter.
• Personal information
• Financial history to determine if you’re capable of repaying the loan
• And a duplicate of the car keys.
Since a car title loan is sort of a secured loan, even if you have a bad credit score, you are still eligible for one, provided that you provide them proof that you can pay back the loan.
Car Title Loans Rates and fees
Car title loans have a much higher interest rates if you compare it to a traditional bank loan, and it may change depending on what state you are in. Some state may not even allow car title loans, and if you are in one that allows it, it’s best to conduct your research and compare the rates before committing to a lender.
You must keep in mind that the overall cost of your loan will vary from the fees and interest rates that comes with it, one thing that you can do to ensure a good loan is to find a lender that is willing to work with you to come up with a reasonable repayment plan.
How the interest rates are calculated
As with other loans, or with interests in general, the longer a loan gets paid, the higher the interest becomes, and with a car title loan, it can become very expensive. Before taking out a car title loan, you must know how to get the total costs, and in order to do that, you must know how car title loans interest are calculated.
An important factor in determining the total cost of your loan is how much principal amount you borrowed, and the term of the loan. A term of the loan means how many years you have to keep paying for the loan until it’s all paid off.
There are two types of interests, a simple and a compound interest. A simple interest is only charged on the principal amount while a compound interest is an interest charged on the principal amount and how much interest have been accrued.
Online installment loans vs car title loans
Although both are short-term loans, an installment loan is a much more reasonable loan to get as it’s paid in a fixed amount every month, while a car title loan on the other hand requires it to be paid off in as early as 30 days to a few months, and that’s why finding the right lender is very important if you’re planning on taking out a loan. The only similarities that these two loans have is that they don’t require much credit or don’t do credit checks at all. Both are a good source of funding when you’re in an emergency.
If you are in need of quick funding while having poor credit, a car title loan is an option for you. A car title loan has quick funding and can be done online, but be advised that car title loans often have very high interests, and if you fail to pay it back, your car might get repossessed.
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