How to Get an Automobile Title Loan
An auto title loan is a short-term loan where a car title is used to secure the loan. If the loan is not repaid, then the title loan company may take the car and try to sell it. Most car title loans are for period of 30 days. To make this kind of loan, your title has to be clean in most cases – meaning, the car must be fully paid off (no outstanding car loan). If you’re still making payments on a car, then this will most likely not work for you. Something like paycheck loan may work better.
To find one of these lenders, you’ll most likely need to find one in your local area since they like to look at the vehicle that the loan is being made against but there are some companies making these loans online now (there’s at least one I’ve seen in Arizona). The local places will want to be sure that they’ll be able to sell the car, so they’ll need to see what condition it is in. Often, the amount that you’re allowed to borrow will depend on what condition the car is in when they do the appraisal. You may also find that their appraisal is lower than what the car’s actual value is worth. This is because they will not want to spend a lot of time trying to sell your automobile for the right price if you fail to pay back your loan. They’ll want to get rid of it as soon as possible and to do that, they’ll need to sell it at a low price.
Some other car title loan qualifications may include:
- You have a land line phone were you live.
- You need to reside at your residence for 12 months or more.
- You have a lease or mortgage statement in your name.
- You have worked at your job for at least 12 months.
- You are at least 21 years old.
- You make at least $1,000 per month.
Once you’ve been approved, the car has been appraised and your loan interest rate is computed, you’ll be able to make a loan up to the value allowed. You’ll notice that the interest is going to be very high. It may be written as something like 25% but since the loan is just for one month, the real interest rate over a year is something like 300% or more. You may also find that the loan amount is for $601 or more. This is because they’re allowed to charge higher interest rates on loans over $600.
During the term of the contract, you may need to keep paying auto license fees and minimum liability insurance may also be required or even comprehensive insurance as well. Also, the company making the loan will put a lien on your vehicle. There may be some title fees associated with adding the lien or removing it.
When the loan comes due, you may be able to extend the loan. Doing this often requires a payment but in some cases, it may not. That interest due for the last month will be rolled into the next month, so it is to your advantage to make some sort of payment anytime you can. Even paying a day early can save you some money. Check your local laws, but often loans cannot be rolled over (or “flipped”) more than 6 times. By that time the interest would be sky high anyway.
If you do not pay back your loan, the car title loan company can repossess your car. They will sell it to pay back the loan. They will often do this instead of try to sue you for the money. If this is about to happen, you can try to contact a lawyer and see what options you have.
People that choose car title loans often have credit problems or they would get a better loan somewhere else. If you do sign the loan and want to get out of it right away, you do have one business day in which to do that. You will have to give back the money that was borrowed. You would not owe any interest at that point. So you could take out a loan Monday morning and pay it back by the end of the day Tuesday with no interest due.
These types of loans are risky. You may be risking your family’s primary mode of transportation, which could make things really, really difficult if you lose your car. So make sure you take your time to understand all the terms and conditions of these types of loans before signing.
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