Emergencies happen at the most inopportune times. When you’re short on cash and have limited options to borrow cash, you’ll need to get creative. Owning your vehicle can get you the money you need.
Car title loans are often a last result option for people with bad credit. However, anyone can utilize this option if they meet the requirements.
How do car title loans work when you are in a bind? They are a fast and easy way to get your hands on needed cash.
Unlike payday loans which must be repaid within a few weeks, car title loans are installment loans. Payments are divided equally over six to 36 months.
Are you looking for personal loan options? Keep reading for everything you need to know about title loans.
How Do Car Title Loans Work? The Answer Varies From State to State
Before you attempt to get a car title loan, research what the regulations are for your state. Title loans are illegal in 30 states. In places where they are permitted, the rules vary.
Some states set limits on the amount you can borrow. Others set a grace period before a car can be repossessed for non-payment.
There are online financial services that will process title loans. Not all online services can issue loans in every state.
Your Car Is Used as Collateral
We can’t reiterate enough that your vehicle serves as collateral for car title loans. You give the lender permission to repossess your vehicle if you miss a payment. Some lenders place tracking devices in the vehicle to make it easier to locate if the borrower defaults.
Because you’ve signed over the title to secure the no credit check loan, you cannot get it back until all terms and conditions are satisfied.
Loans Are based on the Car’s Blue Book Value
How title loans work is simple. Once you prove you have a clear title to the vehicle, the lender will check the Blue Book value of the car. In some instances, vehicle inspection and a short test drive are done.
Depending on the state you reside in, you can get the full Blue Book value up to a maximum amount. Example, if the car is worth $10K but the state maximum is $5K, you can only borrow $5K. In other states, the maximum is 50% of the car’s value.
If you have a vehicle over 10 years old that isn’t a classic or high-value model, it may not be worth the trouble.
You Must Meet Certain Requirements
To get a car title loan you must be at least 18 years of age. In Alabama, the minimum age is 19.
You will need to have verifiable proof of income, which could be your last two paychecks. Last, you may be asked to provide ACH authorization to your bank account or debit card.
Do You Need a Title Loan?
Now that you have the answer to how do car title loans work, would you like to apply online? The process is quick and easy.