Car title loans can save someone in need of quick cash from a lot of hassle, as they can be credited to the borrower’s account in or under 24-48 hours. However, a loan is by default a debt, and it only makes sense to at least know what one is getting into, before taking out the loan. In that regard, let’s now briefly go through the most important aspects of a car title loan.
What Is It?
A car title loan is a short-term, small loan that must be paid back to the lender with interest, anywhere between 30 and 60 days. The lender takes possession of the borrower’s car title during the payback period, but the borrower may still be allowed to use their car.
In some situations, the loan can be paid back over a much longer period of time that can range anywhere between 6 months to 1 year. It is advised to keep the loan repayment tenure as short as possible though because the APR rates on car title loans are extremely high.
What are the Requirements for Getting a Car Title Loan?
The requirements will vary from lender to lender, but there are some common standards that can be highlighted as follows:
- The loan amount must be lower than the equity (resale value – the loan amount) on the borrower’s car
- If applicable, car loans or any other previous loans taken on the car should preferably be repaid in full before applying for a car title loan
- Your credit score is likely not going to be a factor, but that depends mostly on the particular lender
Are They Legal in All States?
Car title loans are not legal in 25 US states, while they are completely legal in the other 25 states. It shouldn’t be hard to imagine that this creates a lot of confusion. For example, Tampa, FL – Fast Money Car Title Loans are completely legal, state registered and state-regulated short-term loans, available for anyone in Tampa, Florida who needs cash on short term notice. This is possible because Florida is one of the states where car title loans are indeed legal.
On the other hand, if you manage to find a car title lender in New York, you are dealing with an illegal loan shark, since the state does not allow car title lending businesses of any kind at all. Always check whether your state allows car title loans to begin with, before even applying or asking for one.
In spite of the high-interest rates, it’s difficult to deny that a legal short-term loan is by far the fastest way of getting access to quick cash. In many ways, car title loans are better than unsecured short-term loans, since the worst-case scenario here is at least predictable. While it may not be the most ideal situation, it is still better to lose an old car and be done with it, than to continue paying outrageous interest rates indefinitely. When owing multiple loans, you might want to read about what is debt consolidation.
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Availing a personal loan online has become a piece of cake nowadays. But one must ensure that they abide by the eligibility criteria, and submit the requisite documents to fasten the loan process online.