Auto title loans are personal loans that are availed by putting across the title of an automobile as a lien in exchange for a loan. Most of the times, cars and their titles are used as collateral for a title loan, and so it is referred to as car title loan. To avail a car title loan, it is mandatory that the ownership of the car title lies in the name of the borrower. The car title is exchanged for a loan and it is kept as a lien with the lender until the loan is repaid.Title loans are one of the best and most preferred no credit check loans. They are very similar to the other bad credit loans like the payday loans and the installment loans, in the sense that they are all loans for people with bad credit history. All these loans can be availed online or in person at a store and they have quick processing and approval times when compared to the bank loan procedures.
Title loans are hypothetically different from the other bad credit loans as they are secured loans and they require the title of an automobile (very commonly cars) to be put up as a lien or security under the authority of the lender in pursuance of a loan. Since there is a certain surety in the hands of the lender, the APR is slightly lower as compared to the other loans for people with bad credit, and also, a higher amount of loan can be borrowed which is repaid slowly.
Although the title loans are the most favored no credit check loans as they are the secured loans, it is still very important to take note of many details and specifics before zeroing on one.
• It is mandatory that the borrower has the car title ownership under his name only.
• It is provided for people with a bad credit score and also for those who have a low income. People with good credit scores and better incomes are generally not targeted by the lenders.
• The loan amount is dependent on the car’s value. Most lenders provide a maximum loan amount that accounts for approximately 25% to 50% of the car’s total selling value.
• Many lenders impose interest rates that may be on the monthly basis. So, it is important to be clear if the interest will be monthly-based or annual-based.
• While applying for the title loan, the borrower will have to submit the documented proofs related to the car title ownership, insurance details and other documents related to the car, photo ID and other identification proofs.
• Many a time, the lenders may also ask for a duplicate set of the car keys. Also, a GPS tracker may be installed in the car to keep a track of the location. Some lenders also install devices that could automatically stop the ignition in case they need to take the car into custody for repossession.
• If the loan repayments have been missed out or defaulted without any prior intimation to the lender, then it may lead to a debt roll-over where higher interest rates or additional fees will have to be paid to the lender in addition to the principal amount.
• If the borrower continues to dodge making payments for a longer term and if the lender gets a hint that the borrower may not be able to repay the loan amount, then he may seize the car. The lender could also sell away the car to recoup the loan amount.
So, to avoid losing your assets, beware while taking a loan and do not take any hasty decisions especially when it is concerned with the finances. Read and understand all the terms and agreement well before finalizing anything.
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