Car title loans are pretty risky and only lenders are allowed to lend in a few states of our country. I bet you didn’t know that! Different states have different issues and criteria related to car title loan. You may be looking hour and hours for a title loan but there is a chance that you won’t find any because of all the technicalities involved.
There are many fraudulent companies that claim to offer car title loans in your state but the matter of fact is they only want to get your information and sell it to the highest bidder. The Federal Trade Commission (FTC), the nation’s agency for consumer protection advises against title loans as these types of loans put your car at a risk and you can even lose your prized possession. You can click here to check Fast title loans near me.
A car title loan is a type of loan which is short term and which has very high rate of interest and it uses clear title on your vehicle as collateral. This type of financial activity should be usually avoided as it is a very expensive form of credit. The lenders lend you money at triple-digit annual percentage and these loans are usually for a period up to 15-30 days.
Applying for a loan
You will usually find car title lenders operating out of store fronts and on the web. You will have to fill out a loan application once you go there to apply. You will be given list of stores near you so that you can go and submit your application there and get a title loan. You will have to show your car, the clear title, a photo ID, insurance proof and this will complete your transaction. Many lenders in the country ask for a duplicate set of keys to ensure that everything goes according to the plan.
If you are applying for a car title loan, then you should consider the following:
- Loan terms- You should ask for the loan terms from the lender and make sure you read everything in the contract or have a professional read it out for you. Lenders should surely provide you with a finance charge and the APR. APR is usually based on several things such as amount you borrow, the interest rate and credit costs you’re being charged, and the length of your loan. All the fees including processing fees, document fees, late fees, loan origination fees, title charges, and lien fees should be disclosed before you sign the contract.
- Add –ons- The repayment fee will increase when you get to know about the add-ons and hence you should know everything in advance. The add-ons increases the credit cost and hence the fees becomes much higher.
Once your loan is approved, you are provided with money and hence lender gets the title. You will not get your title back until you repay your loan. Lenders usually charge about 25 percent per month on an average to finance the loan. This converts to an APR of at least 300 percent.
The payment options usually are that you can pay in person, through an online system or by a method called automated repayment system. In an automated repayment system, the lender is authorized to take out payments periodically from your account. Once you agree then only lenders can make recurring automatic debits. The lender must provide you with your authorization of the recurring automatic debits.
If you are not able to pay the loan within the stipulated time, then lender may ‘roll-over’ the loan in to a new loan. The disadvantage is that there are always extra fees from roll-over and hence which further increases your financial burden. There is also a chance that you may end up paying more in fees than the amount you originally borrowed. If you are not able to repay what you owe, then the lender might decide to repossess your vehicle.
The lender always has GPS devices attached to your vehicle so that he/she can track the vehicle anytime they want.
Finally, we can only suggest to choose an alternative for car title loan as this carries high risk and you can be robbed of your prized possession. Choose wisely!!
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