Sometimes things happen unexpectedly, leaving us strapped for cash. At such times, a loan can come in handy. If you own a car, you can take a car title loan and take care of the issue.
A car title loan is a short-term loan based on your car’s value. You hand over your car’s title, and the lender becomes the lienholder of the car. You still get to drive your car, provided you repay the loan on time–the full amount along with the fees and interests.
But before you go and get a car title loan, here are 5 things you need to know.
1. The Loan You Get Will Depend on the Vehicle’s Value
The loan limit could be anywhere between 25% to 50% of the total car value. The lender will first examine your car to determine its worth before giving you the loan. The loan amount must be lower than the collateral’s value, and that’s why it will primarily depend on your vehicle’s value.
Other factors may also affect the loan amount—like your current income. Some lenders may ask to see proof of income and employment before approving the loan. If you’d like to find out how much money you can get for your car, simply search “title loans near me” and you’ll quickly find many online lenders.
2. You Must Own the Vehicle
The collateral you’ll use for the loan is your car’s title, so you must own it in order to qualify for a loan. You must fully own the car, without any incumbrance–or have some equity in your vehicle.
During the application process, you’ll need to provide a clear vehicle title for your vehicle. The loan must have your name on it, or the application won’t be processed. Don’t just assume that the lender will take your word for it.
3. It’s a Short-Term Loan
A car title loan is very similar to a payday loan. It’s a small loan taken for a short period of time, typically 15-30 days. If you get approved for the loan, you hand over your car title in exchange for it. Most title loans have a term of 30 days. At the end of the loan period, you simply make one lump sum payment.
4. You Can Get Money in One Day
If you meet all the requirements, you can get a title loan in less than 24 hours. That’s right, you can get money to handle your emergency in just one day. Some lenders give the loans in 3-5 hours. This feature makes title loans great emergency tools.
5. You Can Decide How to Use the Money
Many loan types have stipulations regarding how you can spend the borrowed money. However, these restrictions don’t apply to car title loans. The lender won’t tell you what you can or can’t do with the money. Once you get the money, you decide how to spend it.
If you are in a jam, a car title loan can help you get the money you need quickly. But before you apply for one, make sure you understand the terms and conditions.