Everyone has seen the "Cash Loan on Your Car Title" signs somewhere. They are usually in bright, attention-grabbing colors and imply that it's just the easiest way in the world to get money. Be very careful about taking advantage of what seems like easy money. There is always a catch. In this case, the catch is that it will cost you a lot and could even cost you your car.
What is a car title loan?
In a nutshell, a car title loan is a loan on your car. If you own your car free and clear, all you need to do is take the title to a car title loan agency to get a loan. It is actually a lien against your car. The lending agency will take the title to your car to secure the loan.
How much money can I get for my car title?
Car title loan agencies will usually only give you a loan on your car up to 25% to 50% of its value. For example, if your car is worth $10,000, the lending agency will only give you a $2,500 to $5,000 loan on it.
Can I get a car title loan if I still owe money on my car?
Yes, you may be able to. This varies from agency to agency, but there are some that will loan money on a car, even if you still owe money on your original car loan. They will determine how much equity you have on your car and give you a loan based on that figure. The equity is the difference between how much you owe on your car and how much it is worth.
Will the finance company have to contact the original lender if I already have a loan on my car?
Yes, they probably will. They will, at the very least, need the name and contact information for the original lender. The car title loan agency will want to contact them to confirm how much you still owe on the car before they agree to loan you any more money on it.
When can I get the title to my car back?
You can't get the title back until and unless you pay the loan ??? in full. When you make the final payment, the lending agency will return your title to you.
Are car title loans hard to get?
A car title loan is actually about the easiest way to get a loan. The lending agency will, of course, check your credit and want proof that you can afford the loan payments. Their credit requirements are much lower than those of most traditional lending agencies require.
Can I still drive my car if I get a car title loan?
Yes. This is actually one of the benefits of a car title loan. You get to continue to use your car while you pay the loan.
How long will they give me to pay off the title loan?
Car title loans are very short-term loans. The duration varies, but usually, they want the loan paid in full within 30 days.
Will car title loan companies give me an extension if I can't pay the loan off on time?
Many car title lending agencies will allow you to roll the remaining balance over into a new loan. You do not want to do that though if you can avoid it. Rolling the balance over into a new loan will incur new finance charges and fees that will increase the amount you have to pay back. You could easily end up owing far more than you could ever pay back and, as a result, lose your car.
What happens if I can't pay the loan off in time?
You will lose your car if you can't pay the loan off in time and can't roll the balance over into a new loan. The car title loan company will repossess it. They will take it from wherever they find it, too. If you are at work, at the store or at home, they will find the car, load it up on a flat-bed truck or tow truck and take it away. Some car title loan companies will even insist on installing a GPS tracker on your car to make it easier for them to find it. They may even put a device on your car that they can use to prevent you from starting it if you haven't made your payment.
Do I have to go to the car title loan office to make payments??
Car title lending agencies usually give customers several different payment options. You might be able to take the payment directly to their office. Many car title loan agencies want to deduct the payment from your bank account automatically. Some of them will even give you a small discount if you sign up for automatic payments. They may let you mail a check to the payment address they give you or let you go online to make payments electronically.
How much do lending agencies charge in interest on a title loan?
The interest rate and fees charged by car title loan agencies vary, but it is usually quite high. In fact, a car title loan is generally the most expensive type of loan you can get. This is why it should be the very last resort. A common interest rate on a car title loan is 25% each month, which equals 300% APR or more.