Before You Getting a Title Loan
For many borrowers, title loans offer many benefits and the application process is simple. All borrowers should know these 3 facts when they get a title loan. It’s just a sad truth of life: we often don’t have the money we need, when we need it.
Times are especially tough right now. If you’re like many Americans, you might be even living paycheck to paycheck and trying to make ends meet. Luckily, there are many entities out there who are willing to let those who need it borrow money.
If you have a poor credit score, you might want to look into how to get a title loan. A title loan is a type of loan that uses your automobile as a form of collateral. What should you know before you get this type of loan? Read on and we’ll walk you through a few key ideas.
You Need to Own the Car in Question
As we mentioned, a car title loan is a small loan for those who have bad credit. Instead of a strong credit score, the borrower can use their own automobile as a form of collateral. It’s important to note that in order to get a car title loan, you’ll need a clear title. That means you need to have 100% ownership of the vehicle, without any liens.
That means you can’t still be paying it off and it can’t belong to someone else, like your spouse or a family member. The title loan company might also request to see your driver’s license, a photo of the vehicle, and proof of insurance before accepting your application for a loan.
Title Loans Have High-Interest Rates
One thing you should be aware of when looking into title loans in Florida is that you’ll likely be witnessing some very high-interest rates. It is common for money lenders to charge about 25% of the loan amount per month when it comes to these types of loans.
If you were to convert that into an annual percentage rate, that means you’d be paying about 300%, which is higher than many other forms of credit or borrowing. For this reason, car title loans often attract those who don’t have many other credit options. It’s important to compare title loan offers and see where you can find the best deal possible.
You Can Lose Your Car
The reason that the title loan company will take your title is that they need some sort of value against the risk of you not paying the money back. That does mean if you do fail to pay the money you borrow back, the company will take your car from you.
They have total legality to do this based on the agreement you make when you accept the money from them. In some situations, the lender might let you roll the money you owe into a new loan. However, this will only increase the amount you owe and might drive you further into debt. It’s best to be very careful.
How to Get a Title Loan
If you’re looking to get a title loan, there are many companies out there that can help provide you with one. Being aware of the above facts prior to signing any paperwork can be helpful to you in the long run. Need more finance advice or information? Keep scrolling our blog for more.