How do car title loans work?
You can get a car title loan online or at a store. This is how they work:
- Step 1: You show the lender:
- your application
- your car
- the title to your car
- your photo ID
Some lenders require an extra copy of your car keys or make you buy a roadside service plan.
- Step 2: If the lender approves your loan, he gives you the money and keeps the title to your car.
- Step 3: When it is time to repay the loan – usually in 30 days – you pay the lender the amount you borrowed – plus a monthly fee.
How much does a car title loan cost?
Lenders charge a monthly fee. This fee can be a lot – sometimes as much as 25% of the amount you borrow.
- You want to borrow $1,000 for 30 days
- The monthly fee is 25%
- $1,000 x 25% = $250
- The amount you owe after 30 days: $1,250
How do I compare costs?
Most loans have an annual percentage rate. This is also called the APR. The APR tells you how much it costs to borrow money for one year. The APR on car title loans can be very high.
When you get a car title loan, the lender must tell you the APR and the cost of the loan in dollars.
What is an APR?
APR is based on:
- the amount of money you borrow
- the monthly finance charge or interest rate
- how much you pay in fees
- for how long you borrow the money
- You need to borrow $500. You plan to repay the money in one year.
- You compare the costs of borrowing that money:
- The bank or credit union has a loan with an APR of 7.5%
- You will pay $21 in interest to borrow $500
- A credit card has an APR of 20%
- You will pay $56 in interest to borrow $500
- A car title loan has an APR of 300%
- You will pay $1,111 in interest to borrow $500
- The bank or credit union has a loan with an APR of 7.5%
What happens if I can’t repay the lender when the money is due?
You might not be able to pay the lender when the money is due. The lender might let you borrow the money for another 30 days. This is called a “rollover,” or “rolling over” the loan. To roll over the loan, you will pay another monthly fee.
If you roll over the loan several times, you might pay a lot to borrow the money. Eventually, you might not be able to repay the lender.
What happens if I can never repay the lender?
If you cannot pay the lender the money you owe, he might take your car. This is called repossession. The lender may sell your car and keep the money.
If the lender takes your car, you might lose your only transportation. This could make it hard to get to work, school and other places you need to go.Read more
Online title loans are becoming popular and it’s no wonder why. They are so easy to apply for and there is now no need to visit a lender. Pink slip financing is much different than the more popular payday loans and installment financing. Any company who specializes in car title loans should be able to process your application with 24 hours. That’s why you may want to think twice about short term lending when you can apply for title loans online. You need to be careful with any process that involves your detailed personal and financial information. Borrowers need to practice due diligence to assure there is no compromise. If you find positive reviews online then you are probably dealing with a reputable lender. You don’t know what a lender is doing with your personal information. Once you apply and hand it over you can’t be sure that they won’t use it for illegal activities. Let’s take a look at some information regarding this. We will consider safeguards to put in place when applying for online car title loans.
Most people that read this article know what that a car title is the same thing as a pink slip. They know you can borrow a small amount of money for a short amount of time using your car as collateral. As the name implies, you have to give the title loan companies a pink skip to your vehicle. This lets them gain possession of it should you fail to repay your loan. You also get to retain possession of your vehicle throughout the entire duration of the loan. The car will only become your lender’s property should you fail to repay it and they reposes it. This is a very common practice when it comes to borrowing money. Most people are happy to do this because they will never risk losing their car and will pay back the money as fast as possible.
Exercise Caution With Car Title Loans Online
Online title loans are online versions of your typical pink slip loan. Of course, it becomes an online loan when you visit websites on the Internet where you can apply for car title loans. The application process is simple and easy. This method of applying with an online title loan company is fast becoming popular. All you have to do is submit your relevant documentation relating to your identification and vehicle. You can even be pre-approved in less than one day with some lenders.
How Could My Personal Information Be Compromised?
As with any important financial decision in life, it’s imperative to do everything safely. That way you don’t cause detrimental circumstances to yourself. This is no different when applying for online title loans. You need to be sure that you are dealing with a reputable company. Here are some practices that dodgy title loan companies who deal with car title loans online may engage in:
Selling Leads For Online Car Title Loans
This is when the company will pass on your information to other lenders so they can get in contact with you to try and win your business. The title loan companies that engage in this practice are not actually lenders. These companies act as an affiliate in exchange for a commission. They receive payment on a per lead basis for every person that they refer to a lender. They could also get payment on a per sale basis for every successful conversion the lead buyer makes.
Working With Credit Repair Companies
While this one is not as common, it’s quite a sophisticated scheme that can net a title loan lender big bucks. This can occur with either a lender or an online affiliate. They will pass on your information to credit repair companies or freelancers. These companies will then contact you in regards to your credit score. Considering there are no credit checks required for people who want to get car title loans. There is a high chance that most of the leads that come through have a bad credit rating. While this practice is illegal, it doesn’t stop unscrupulous lenders, affiliates, or credit repair companies from doing this.
One of the most common and easiest things to do with your personal and financial details is to steal your identity. The lender will already have many forms of documentation that they could, in theory, use to do things in your name. They will know your full name, date of birth, address, employment, and wages. They can possibly have other documents such as utility bills and bank statements too. All companies that offer online title loans and affiliates are bound by very strict laws regarding issues like this. However, there is always a chance that someone can go rogue and have an ulterior motive with your title information.
Best practices to mitigate aggressive title loan companies
Always run background checks on the website and title loan companies that you are applying for title loans online with. You can easily search Google to find information about who the website is registered to, who the company is registered to, what their physical address is, and other related business information. Some websites will have a live chat system integrated into them so you can talk with a representative. Take this opportunity to ask as many questions as you wish to make yourself feel better about doing business with them. If not, you may be able to get a phone number or at the very least an email address. If there is no form of contact whatsoever displayed on their website, then you can steer clear of them as this is suspicious. Check to see if the website is an umbrella lender of a larger entity of title loan companies. Down this site there is a ‘footer’ section. This page will typically contain information such as contact details and the name a company is registered under. Google the company name in the first point above to see if they are a stand-alone provider or part of a larger network. Read their terms of service. This page will probably be in the footer section. Ydou will be provided with a link to it during the application process before you complete it.
Read every last word so that you can understand exactly what you are getting into. If you have any questions you can call, email, or use their live chat system. Search the company name or website in Google to look for any bad online title loan reviews that are about them. Be careful as these can be faked in some situations. We see this often with payday loan companies and installment lenders. Use reputable review websites such as Trustpilot and google reviews. With these you will know they are authentic and genuine testimonials from legitimate customers.
Why It’s Important To Find A Reputable Title Loan Company
At the end of the day, it’s your money and it’s your life. Not going through a reputable company that specializes in online title loans could leave you in a very strenuous situation. The hit to your finances and credit report can impact you for a very long time. You could be receiving endless phone calls from companies. Or your original lender or affiliate has sold you personal information. You could be in a situation much worse where your personal details get in the wrong hands and the authorities have to get involved. When making such an important decision in your life, take the extra time to research your potential lender. With that you can have peace of mind knowing that you believe you are in the right hands. That little work can be the difference between you getting your car title loans done with ease. On the other end of the spectrum you may end up with some serious legal and financial troubles as a result.