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car-Title-Loans-bridgepaydayMost of us may have been in emergency situations, but with very limited sources of cash,it is not such a pleasant situation to be in, the discomfort and the uncertainty can give you ulcers. Individuals who cannot acquire a traditional loan can turn to car title loans as a borrowing alternative.

Car title loans are small loans that are taken out against the borrower’s car for a short period of time. Simply put, the borrower gets a loan against his car or any type of vehicle. Thus, the borrower will submit his car title loan to the lender who in turn gives him the loan. The loan period is usually 30 days, but it depends on the lending company’s policy. These kinds of loans have gained popularity among a lot of people as a way to get

How to obtain the car title loan

Lenders of these kinds of this kind of loan are everywhere nowadays. Thus, all you have to do is go to a car lender. They give you an application form which requires you to put your personal details, the amount of money you need, the period of repayment and other details that are required for proper documentation. While applying for a car title loan, you need a couple of documents such as the car you want to borrow against, the car title bearing your name. You also need to be clear of any other loans. You may also need a copy of your identification card.

The lending company may also suggest that you bring a duplicate set of car keys or force you to buy a roadside plan but basically on the back of your mind you don’t ask any of them used in any period of time. The process doesn’t take that long. The company needs to verify your personal details, your proof of employment or income generation routes. They will also need to see the car insurance documents. The loan amount will be between 30-65% of the car’s worth. This could be between $100 to about $1500 and could go even higher up to $5000. This all depends on the market value of the car, its state and the terms agreed between the lender and the borrower. The loan processing is very fast could be as fast as 20 minutes.

You can also take out a car title loan online. This means that you could have your loan processed online. With technological enhancements, the lending process and other financial processes have become very convenient.

Cost of the car title loan

Cost of the car title loan
Cost of the car title loan

The car title loan is usually a 30-day loan, meaning that the interest could be quite high. For a typical car title loan, the loan interest rates could be as high as 25% of the total amount borrowed. Essentially, the annual percentage rate (APR) of this loan is very steep. APR is a percentage that tells you how much you have to pay for a loan annually. In the case of car title loans, the percentage is about 300%. This means if you borrow about $500, you will be paying about $1111 by the end of that year. Car title loans have the highest APRs compared to other loans in the market.

Payment options

How do you pay back a car title loan? This loan gives you 3 options. They include: in-person payment, online repayment and through automated repayment systems.

In-person payment

This is where the borrower goes to the lending company and make a repayment. This kind of repayment option is common, especially with small loans.

Online repayment option

Online repayment option
Online repayment option

Assuming the borrower is a busy person, the online option becomes a very easy and convenient way to repay the loan. It basically entails the sending of money through online transaction money transfer methods like PayPal. This method is also very convenient for small loan repayment because the charges for sending small amounts of money is pretty low.

Automated repayment

This method allows the lending company to make a withdrawal from your deposit account or your debit card when the payment is due. The company, however, cannot make recurring automatic debits without the approval of the borrower and with prior arrangement. This means you first have to get a transaction report before the bank allows this transaction to proceed.

Rollovers

The borrower may be having trouble with repayment. The lender may then give the borrower a rollover option. This means the lender lets the borrower extend the repayment period. This arrangement comes with new fees and a different interest rate. This allows the borrower to clear the outstanding balance to avoid other implications that could come with the inability to clear outstanding debt.

Rollovers also come with disadvantages. Since it’s a new arrangement and the amount to be paid is higher than before, the borrower may have trouble paying and thus leading to him rolling over again and again. The borrower is now completely stuck in a debt trap.

You need to be very careful with rollovers as it involves new terms of agreement and additional fees.

Repossession

Car repossession becomes the inevitable thing if you are completely unable to pay up. The lender takes the borrower’s car, and may to sell it to recover the outstanding debts. The borrower loses his car. If the lender decides to sell the car, he may either give the borrower the money left after clearing the debt or just keep all the money. It all depends which state you are living in and repossession legislation.

Generally, car title loans are a very good alternative if you need money quickly. However, there are implications if you can’t pay up. Before you decide to take up a car title loan, you have to be sure that you are able to manage the debt. Otherwise, you will be in a worse off financial situation than before.

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