Car title loans are similar to other types of loans in that they are designed to augment your finances. Nowadays, you can obtain such loans from physical lenders as well as online lenders. Either way, car title loans involve a generally simpler process, which is why they are a favorite among borrowers.
So what in particular is a car title loan? It is a secured loan you get in exchange for a vehicle title that serves as collateral. In other words, your vehicle will temporarily be owned by your lender until such time that you complete your loan payments. But of course, no matter how simple that may sound, there are a few things you need to keep in mind before submitting an application.
Payment Terms and Conditions
This is the most crucial aspect of a car title loan that you need to know before you proceed.
Ask them about the interest, how much exactly you should pay on on a monthly basis and for how long. When it comes to loans, you can’t afford surprises.
When considering applying for a car title loan with a certain lender, ask them if there will be a penalty for paying off your loan early. Yes, some lenders will penalize you with a fee if you don’t pay according to their exact terms, so do ask about that before going further.
Application and Approval
Some car title lenders follow a streamlined application process that happens purely online, or they may also allow you to apply in person at their physical office. There’s no doubt that the online route is more convenient and faster too.
Driving Your Car
With some lenders, you will be able to use your car as usual for the duration of the loan. They will probably require you to see them at their office every now and then, or they may put a tracking device on your car so they can monitor your movements in the event of a default. Then again, some lenders will want you to physically turn over your car to them until you’ve completely repaid your loan.
This may sound like a given, but a lot of people still don’t bother to check if the lender they’re planning to approach is licensed to operate locally. This is because regulations that impact car loan requirements usually vary from one area to another. Besides, if you ever have issues with a licensed lender, you will have a proper venue to resolve your grievances; otherwise, you are on your own.
Finally, don’t focus on just one prospective lender when seeking a vehicle title loan. In fact, you should check out at least two or three other choices so you can find the one that truly satisfies your needs.