Car title loans have been around for years and yet the most common question we hear is “how do car title loans work”. Much like payday loans and installment loans, a title loan offers you a way to get a lump sum of cash in a short amount of time. There are a lot of things that make car title loans different from typical short-term loans. The biggest difference is that you’re securing your vehicle to the amount borrowed. That’s right, with most types of online title loans you must let the lender attach a lien to your car. Here’s the good news though, with a pink slip loan you can get a lot more money than what you would expect to get if you went to a bank or credit union.
You might have some concerns about attaching your car’s title to a loan that otherwise may have been unsecured. There are a few things to remember though with a title loan when you’re thinking about how they work. With the advent of online lenders, there are more companies ready and willing to offer money for your vehicle’s pink slip. Take the State of Texas as an example. In just over a decade they’ve added hundreds of lending locations and you can now apply for your loan and complete all the paperwork online. After that, it’s just a simple matter of doing the vehicle inspection and picking up the cash. This means there’s more competition and lenders have a lot more flexibility when it comes to getting competitive rates and financing amounts for car title loans online.
Ultimately, it pays to find the best form of funding that fits your needs. Also, you no longer have to worry about giving up your vehicle to get access to cash. It used to be that to get an online advance you would have to give up your car. That doesn’t make much sense now, does it? How would you get to work, or run the normal errands that come about each day? With all title lenders today you can rest well, knowing you will keep your car as long as you stay current on your monthly payments. There are many choices available to you. But we recommend first speaking with a representative who knows how to handle car title loans. You finish the payoff when you complete the monthly installment payments. Upon paying off the amount in full, you will no longer have a lien attached to your vehicle and you can get the pink slip back.
Another aspect of car title loans that you need to understand is how the online application process works. Unlike the process of applying for a payday loan or bank loan, you will need to submit more paperwork. The lender needs to verify you’re the current owner and that’s the most important component of how title loans work. A finance company needs to know there’s equity in the car and they can use that collateral if there’s a default. They need to make sure you have no liens or other issues that could impact your title situation. You also need to verify the car exists.
Believe it or not, some people try to apply for equity funding without verifying they even have a car! Like most other types of short term borrowing, these loans have got a bad rap over the past few years. People say the interest rates are too high, or they say some lenders will immediately seize your vehicle. This can happen if you fall even one day behind on your monthly payments.
Most reputable title lenders and RV title loan companies will dispute the fact that interest rates are too high or that they’re taking advantage of people that are in need of quick cash. They say the interest rates need to be high because they won’t generally check your credit. If you have past loan delinquencies or other financial issues that won’t always disqualify you for a loan.
Keep in mind, that car title loans are going to be expensive and should be solely used for a short term financial crisis. It’s good to know you have equity in your car that could be used as collateral. But you don’t want to find yourself in a situation where you took out a pink slip loan and fell behind on your payments. When you get to that point you run the risk of losing your car and owing money on the outstanding amount you borrow! Don’t fall into this position. It’s important to pick the best title lender, so you don’t have to deal with situations like these. The application and underwriting process is easier once you find a decent company to work with. Most lenders of car title loans online will try to work with you if a payment becomes past due.
Another thing to remember is the fact that you have rights as a consumer. Did you fall behind on the money payments? If your car gets repossessed the lender still has to follow specific rules on how to handle the situation. We would urge you to seek legal assistance if you find yourself dealing with this scenario. Look into other options like bank loans and even small business loans if you own a company. The US Government has a great website that profiles different SBA financing options. Secured loans are a valid resource for a financial emergency, but you should only borrow money if you know what you’re doing.