When you’re short of cash, the web makes it all too easy to start swiping through loan options, be it credit card loans, payday loans, cash advances or borrowing against your car online. A car title loan is a secured loan in which your vehicle’s title serves as collateral. That secured part is likely why approvals seem faster than they would with other loans. The question is what the whole deal looks like, what the costs of borrowing are, what happens if you’re late on a payment and how much pressure that monthly payment is going to put on your finances. Let’s find out.
Car Title Loans Explained
A car title loan lets you borrow cash using the value of your vehicle as security. You get quick access to the cash you need, but in exchange, the lender gets a claim on your car if you can’t pay back the loan. Most people nowadays apply for these loans online and the amount you can borrow varies dramatically between $50-$50,000 depending on how much your vehicle is worth and how much the lender figures you can realistically manage to pay back. Loan terms also come in all different lengths. Some are designed to get you paid off fast, while others spread the payments out over several months or longer.
The Trade-Offs You Can’t Ignore
Credit rating
Vehicle title loans online are marketed as bad credit friendly because lenders aren’t relying solely on your credit history; they’re also taking a close look at your car’s lien-free title and whether you’re earning enough to make the payments.
If you know you’ll miss a payment
Many lenders will still talk you through a modified payment arrangement or a date shift, depending on the contract. There’s always a chance to negotiate before you start getting late fees and penalties rather than after.
What happens to your car
You get to keep driving the car as long as you’re making payments on time. However, if you get behind on payments and can’t work out a way to catch up, the loan terms may give them the right to repossess the car.
Starting the Process – What to Expect
- Fill out the online application: Most lenders will want to see your driver’s license or state ID and might even ask for proof of insurance and your pay stubs (though that can vary from lender to lender).
- Prepare for a possible credit check: That’s usually the case only if you don’t have much documentation to back up your income.
- Appraising your car: The lender needs a realistic view of what your car’s resale value is, so they may ask questions, take photos or even need to come and take a look at the car in person. Lots of lenders use a pricing guide and add in the overall condition of the car to determine its value.
- Review the offer and paperwork: If you do get approved, you’ll see the loan amount, total cost, due date and what will happen if you miss a payment. Read it all carefully, because it’s a binding agreement and the small print can end up costing you the most.
- Receive funds: After paperwork and bank details are confirmed, you may receive your cash the same day or the next business day.
- Repay on time: Many title loans have short timelines of just a month or two. Some lenders may offer a renewal/rollover, but that can also mean more interest piling up, so it’s something you want to understand before signing.
Conclusion
If the title to your car is free of any liens, vehicle title loans online can turn that asset into quick cash without you having to wait around for weeks. The bottom line is that you’ve got to know exactly what it’s going to cost you in total, get a clear picture of when the payment’s due and don’t go guessing about what happens if you can’t pay on time. If you decide it’s for you, just fill out the online form, send over the necessary paperwork and you’ll soon find out how much you qualify for and how soon you can get your hands on the money.
