Auto title loans are the easiest ways of borrowing money where the lender lends money by using vehicle title as collateral, without even checking credit score of the borrower. Whether you need $100, $1,000, or $10,000 you can get the required cash (to sail through the temporary hard pressed times) in minutes. Car title loans or auto title loans (to say in general terms as these loans can be acquired by putting motorcycle title as collateral as well) are subjected to different regulations in different states of the USA. So, before borrowing such a loan, you must check out all the important information associated with it.
Here are 3 frequently asked questions along with their answers:
FAQ #1: What is a Title Loan basically?
Car or motorcycle title loans are called title loans in short. It is a kind of secured loan where the lender keeps title of the borrower’s vehicle to give loan to the latter. Until and unless the loan amount is repaid in full along with the interest rate, automobile’s vehicle title is temporarily surrendered to the lender. If the borrower fails to repay the loan amount, title loan lender has the right of repossessing the automobile, selling it, and recovering outstanding debt.
Title loans are short term in nature and can be acquired in just minutes. If the loan amount is $100-$500 you can acquire it in minutes. Title loans generally come with high rate of interest, say 35 per cent APR or sometimes even more. The lenders say that the high default risk (because these loans are drawn mainly by people who are already in financial problems) leaves them with no other option but to charge higher interest rates.
FAQ #2: What is the Process involved in Title Loan Lending?
Title loans can be obtained either from store fronts or online. The borrower has to show valid identifications such as driver’s license, income proof, mail proof of residency, lien free car title proof, car registration, car insurance proof, and others. One form involves following of Kelley Blue Book that shows vehicle’s resale value. In many cases, half of car’s resale value is offered by the lender.
Auto title lender doesn’t check credit history or credit score of the borrower. However, he checks vehicle condition and value of the vehicle on which the secured loan is drawn. There are some title loan lenders who also verify whether the borrower has a regular income source or is employed. If there is any financing or lien on the automobile on which you are going to take loan, the lender will not offer you the loan. There is no fixed rate but range anything from 30 per cent to more than 100 per cent APR.
FAQ #3: What are the Auto Title Loan Laws in California?
A very common query among consumers is – how title loans work in San Diego, California? California law doesn’t have many regulations to limit interest charged by lenders in the state. However, auto title loan amount within $2,500 can’t have over 30 per cent interest rate. There is no limit on interest rate charged on loans above $2,500.