If you live in the U.S., chances are you have heard a commercial on the radio, or seen one on television, from companies that provide title loans. For those who have never gotten a title loan before, though, the details of how this type of lending works might be a little bit unclear. Here’s a quick overview to help you better understand it.
Lenders who offer title loans make small loans (usually under $10,000) over a short period of time. These differ significantly from auto loans, which are designed to help you purchase a vehicle, and usually last for five or more years. The title loan is one that uses a vehicle that you already own as collateral, in exchange for immediate cash. You will provide the lender with the title to your vehicle, and they will examine the value of the vehicle, any current outstanding debt obligations you might have on the car, truck, motorcycle, or other vehicle, and then determine how much they are willing to lend and how long you have to repay the loan.
How to Apply
Most lenders want to make the process of obtaining a title loan simple and hassle-free. Since these are often for small amounts, and shorter durations than a traditional bank loan, borrowers can use them when they have an immediate need for cash and won’t have to wait to hear back from a bank, which could take several days or weeks.
To apply for a title loan, simple take the title of your vehicle to a lender like Utah Money Center that provides these loans. You will likely need to fill out a short application (in some cases you can do this online before you arrive at the loan center), and also will need to show photo identification.
The lender may also need to see photos of the interior and exterior of the vehicle, or will want to examine the vehicle in person prior to determining the title loan value. If the car has significant body damage, or is not in good running condition, it will be more difficult to use it for collateral in a title loan.
What You Should Know Before Applying
One of the benefits of a title loan is that you don’t have to sell your car to get the cash, and most lenders will allow you to continue driving the vehicle during the repayment period. It’s important to understand all aspects of the loan contract, though, to avoid violating it and finding yourself without a car.
If you have bad credit or a history of bankruptcy, there are still plenty of options for you. In fact, title loans can be a great option because they can actually help you build credit in the process.
You also don’t have to have the title physically in your hand in order to get the loan, as long as you can prove that you own your vehicle. It’s important to note that if you are still making payments to the bank for a loan on your car, you will not be able to use it for a title loan. The car also must be in your name.
Finally, make sure you fully understand the contract, the terms, and the repayment process. At Utah Money Center our loan processors will review the entire contract and discuss payment options, including interest-only or principal and interest payments, so you understand your obligations. Missing a payment or failing to repay the loan in the time specified in the contract could result in you losing your car, so it’s important to know these details.