A car title loan can be difficult to obtain, especially if you are not aware of the process of getting one. Here are some of the important things to keep in mind when you are applying for a car title loan.
How to Apply for a Loan
You can actually apply for a car title loan, either by going to storefronts or online. Regardless of how you want to do it, you will still be asked to fill out a loan application form. You will need to present important documents including a clear title, the car itself, proof of insurance, and a photo ID of yourself. You should also keep a duplicate set of the keys to your car, as this is also typically required by a lot of lenders.
Before you finalize your application, be careful to go over the following first:
- Carefully read through the loan terms. Before you agree to the loan, the lenders must provide you with a copy of the loan’s terms in writing. Multiple laws in the United States treat car title loans just like any other form of credit, such that the loan’s complete cost must be fully disclosed to the person who is being lent to. To be more specific, information such as the APR or the annual cost of credit, as well as the financial charges that go with the loan, should be fully disclosed to you. The loan you are about to make may also include other charges such as processing fees, late fees, document fees, title charges, loan origination fees, and lien fees.
- Be wary of the add-ons that come with the loan’s cost. Aside from the loan itself, there are add-ons which you can include in your plan. Among other things, these add-ons can include a vehicle roadside service plan. The plan’s cost will depend on the loan’s value. The cost of the credit will go up if the add-ons are required, and since these can be expensive on their own, you should go over them first before you finalize everything.
What Makes Title Loans Expensive?
In order to finance your loan, the lender would ask for you to pay 25% monthly, which would be equal to about 300% APR. If you have any other additional fees or add-ons in your loan, there is a huge chance that this figure will be much higher.
For example, you are going to borrow $500 and you are given 30 days to pay that back. On average, you will need to pay an additional $125 worth of additional fees on top of the original loan. You will therefore need to pay a total of $625, on top of other fees within the next 30 days after you have taken the loan. If you want to get a title loan estimate, you should consult your lender and ask about your options. You will need to clarify with your lender how much they will be willing to loan you.
How Can You Pay?
Car title loans can be paid through three different methods: You can pay for it through the store in person, you can use an automated repayment system, or you can use an online system.
If you use the automated system, it means that you are authorizing the lender to directly take payments from your bank account until you are finished with your payments. Before the lender can even start taking money from your account, you would need to agree to it in advance, and the lender would need to provide you with a copy of the authorization for the automatic payments you will make through the automated system.
There are a lot of things to make sure before you finalize your car title loan. Since there are many additional fees that are typically affixed to your original loan, it is important that you are given a list of all the things that you will have to pay for aside from the loan itself.