A car title loan, also known as auto title loan or title loan, is a short-term loan in which the borrower’s car title is used as collateral i.e. if the loan is not repaid, the lender has all the rights to its ownership and recover the mortgaged amount by selling it off. Such a loan is easier to acquire and involves the act of handing over your car to the lender until the loan is paid back.
However, there are many states that don’t allow this type of loan in any form and have strict laws and regulations in its regards. So, before you plan to apply for this type of loan, make sure that the local governing authorities permit you for that.
Another factor that would decide your first-ever experience with a title loan, is the kind of finance company you choose. A reliable title loan lending company would help you with fast and easy processing of your loan without you worrying about the credit checks or job requirements.
You would need to consider the following factors to avoid getting into pitfalls and land up with best deals instead –
The first and foremost thing to see is to how the lender wants you to repay the loan – whether it will be a direct payment or through your paycheck?
You would also need to evaluate the exact time duration for which your title loan will last. If you choose a longer repayment period, then the monthly installments will be lesser whereas, for a short time period, the installments will be a bit higher. The biggest advantage of a short duration loan is that you would have to bear fewer finance charges every month.
As an astute customer, it is your duty to choose the most appropriate option for yourself.
Since these loans cannot have you charged with delayed payment penalties (as they already have your car as collateral security), there can be situations where the lenders might charge you with early repayment penalties (Yes! You read that right). You will be penalized with a certain amount if you pay off your loan before its scheduled time.
So, make sure you discuss this out with your lender before taking the next step.
Application and Approval Process
Majority of title loan lenders offer the privilege of filling up the application form online while some of them might give you a verification call as well. Anyway, it saves you a lot of time as compared to applying at a local office.
A company like Fast Action Finance in Ontario verifies your application and hand over the cash to you within just 30 minutes.
Condition and Model of the Car
The amount of loan you can avail using your car is highly dependent on its current market value. The lenders usually have prescribed guidelines with respect to the kind of cars they accept. Some even consider the model and mileage and pay a lot of attention to the car’s manufacturing year.
So, it is best to clarify all the pre-requisites from your lender before filling any form.