The financial crisis of 2008 had a major impact on the global financial system. The doubling of the unemployment rates, difficulty in borrowing money, and house price increases are just some of the consequences of the disturbance to the financial markets. Even now, a decade after the big crash, it’s still difficult to borrow money. Banking, as well as non-banking financial institutions, refuse to give out loans if the amount requested isn’t justifiable by the income. Restrictions don’t make life easier for the typical household. 

Title Loan

The only solution left is to take out a title loan. This product offered by certain financing companies enjoys popularity among consumers. However, this doesn’t mean that people don’t need more facts or figures. Understanding title loans isn’t an overwhelming process. So, without further ado, here’s everything you need to know. 

Title loan meaning and definition 

As the name clearly suggests, a title loan is a loan. This is the simplistic definition. What you need to know is that it’s a type of credit in which the borrower uses an asset as collateral. Car title loans are by far the most popular ones. The potential borrower must have a vehicle in their possession. Additionally, they are required to sign over the title to the financing company. Attention needs to be paid to the fact that the hard copy of the automobile title is surrendered for a limited amount of time. 

Generally speaking, title loans are paid back in a maximum of 30 days. Nevertheless, the repayment schedule depends a lot on the lender and the prevailing lending laws. Approval is usually quick, which means that you receive the money right away. If you don’t have emergency funds, for instance, taking out a title loan makes perfect sense. It’s important to take into account the fees and annual percentage rates prior to making a final decision. 

How does a title loan work? 

Applying for a title loan is a pretty straightforward process. If you need money for an emergency situation or you wish to start your own business, you’ll no doubt find yourself asking for financing. To take out a loan, you have to: 

1. Head over to the lender’s office. 
2. Show certain forms of identification (ID, proof of residency, contact info, references). 
3. Wait for approval (it doesn’t take more than half an hour). 
4. Drive away with the money. 

The process is relatively fast, as you can see, and the amount of money that you receive depends a lot on the value of your vehicle. As a rule, financing companies offer somewhere between 25% and 50% of the value of the automobile. Certain factors are considered when it comes to determining how much cash should be offered. Besides the vehicle’s equity, mention can be made of: 

• The current mileage of the car 
• The overall state of the car
• Your financial strength

The good news is that you get to keep your car. So, you won’t have to depend on others as far as transportation is concerned. 

Understanding the title loan requirements 

If you decide to take out a title loan, make sure to understand the requirements. Title loans aren’t the same as traditional loans, in the sense that they have certain requirements. The borrower doesn’t have to go through a credit history check. Lenders rarely have the time to scrutinize the borrower’s financial history, so bad credit doesn’t necessarily stop you from qualifying. Some lenders may choose to carry out an extensive check. They don’t do it because they want to find the best possible offer for the borrower. 

The requirements vary from lender to lender and from state to state. Maybe so, but it will be necessary to meet some of the following criteria: 

• You must be at least 18-years old. 
• You must have a car and a clear title in your name. 
• You must have a steady income.
• You must never have filed for bankruptcy. 

Unfortunately, you can’t get a title loan if you don’t have a car title. This translates into the fact that you can’t use your car as collateral. You must present a copy of the title when you apply. Imagine the following situation: there are two names on the title. In this case, the first name that appears on the document will determine who will be the borrower and if they qualify. If the name contains an “and” or “and/or” the loan will be issued to both parties. 

How to pay off a title loan as fast as possible 

Acquiring a small loan with the title of your car is a good idea. As long as you can afford to pay back the loan, there is nothing to be afraid of. You can fully repay the amount borrowed, in addition to the interest, so there won’t be a problem. However, there are some techniques you can resort to in this sort of situation. Here are just a few examples. 

1. Calculate the monthly loan payments into your budget. 
2. When you have extra money, try paying off more than it’s required. 
3. Find new ways to make extra income. You don’t have to take a second job, but you can do some freelancing work every now and then. 
4. Give the lender a call and make sure everything is okay. 
5. Try to negotiate. 

If you don’t pay your title loan on time, … 

It’s not recommended to take out a title loan if you know you can’t pay back the money. If you don’t make the payment on time, you risk losing your car. Lenders are required by the law to pay you the difference in case they sell your automobile. There is no reason to worry because you won’t end up in this situation. As a matter of fact, situations of this kind are quite rare. Borrowers are given the necessary data, which means that they are informed about the rates, expenses, and advance time. All this information makes it simple to anticipate payments.