Finally the season of title loans is in full swing. From July thru August more people get title loans then the rest of the months combined. Currently the trend is to simply get an online title loan because the wait times in offices tend to get a bit long (some people have reported to our offices a wait of 4 hours). So what is it that all these people know that you may not?
If you need a loan on title of car that you own, you have a lot of lenders who are competing hard to get your business. Just like the day after Thanksgiving for retailers, deals are the best right now and will simply get better but will totally end at the end of August. With this in mind I want to share with you what people are calling on the phone about right now:
TOP TEN THINGS PEOPLE ASK WHEN CALLING A TITLE LOAN COMPANY:
10: I HEARD TITLE LOANS HAVE REALLY HIGH INTEREST RATES. ARE YOU GUYS LIKE LOAN SHARKS OR WHAT?
Believe it or not, we actually get people calling us who need a loan and then insult us from the start. The reason why this is so insulting is that loan sharks are like the Sopranos and don’t care if you live or die. They just want their money back and the interest rate is not only crazy high but also goes up based how they feel about you at the moment. SO let’s clear this up right now. NO, title loan lenders are NOT loan sharks. They are financial institutions just like a bank but look more like a dressed up pawn dealer. No one is going to come out and break your legs if you fail to pay your loan. This is not to say that by not paying your loan you will not be repo’ed or sued. You will. It is just that the way title loan companies work, you will have a high interest rate and in most states, you will be permitted to take many months to pay it off.
So here is an example of why someone would say this and my counterpoint to it. A person wants to borrow $2500. The interest rate on a loan that small is 8-10% typically per month. The payment is usually 10% of the loan balance and the loan paperwork is written out for 36 months for full payout. IF you took the full 36 months to pay it off you will have ended up paying $9000 for a loan of $2500. That means the loan company earned $6500 on your loan. Yah, people are gonna call you a loan shark when they think they are being ripped off pretty badly and let’s face it, that’s what this looks like… until you look closer!
Almost without exception, title loan companies give people who need a loan on title of car will do so without a lot of hassles and will do it in a few hours (of even minutes). Try to get a bank to o that. Also there is usually no prepayment penalty. What this means is if you only had the loan out for 5 months, the loan now looks like this: $2500 loan at 10% per month interest which is $1500 interest in 6 months and the total payback is $4000. Not so bad? Well it gets better… that’s at 10%. We know companies that will do 8% so that would save you $300 off that! Looking better with each time you review it right?
Try again… say you only needed it for 2 months and it was at 8%… that’s only $400 interest and your would be paying back $2900 total on a $2500 loan!
Unlike loan sharks, title loan lenders do NOT want you to keep the loan out for the entire period they allow you. They know if you do, you will probably feel bad about the amount you paid. Instead they hope you only keep the loan out for as little time as you can afford to do it and where they REALLY make there money is you keep returning each time you are in small rut. This way, they are considered more like a close member of your family.
9: HOW NEW DOES THE CAR HAVE TO BE?
Why title loan companies have a hard time with this question is because so many things change over time and the value of a car changes at any time. The only way to know for sure is to give them the vehicle identification number OR the year, make and miles and let them figure it out. An example of this is an SUV. The price of gas will dictate the value of the vehicle faster than the year of the car. Most SUV’s hold value but when the price of gas goes up, no one wants SUV’s. When the price drops, everyone wants the comfort of the vehicle.
Also, a car can cross from being “old” to being a “classic” by demand on the market. Sometimes just one year makes that difference. Then there is the difference between what system they use to measure the value. There is Kelly Blue book, Black book, MMR, and several others and each one will give you a different price.
So let me ask YOU a simple question… do YOU think your car is worth about $4500 if you were to sell it right now? If yes, then there is a good chance you can get a title loan.
8: CAN I STILL GET A LOAN IF I OWE MONEY ON THE CAR RIGHT NOW?
Well that depends on the lender you go to AND the state your car is registered in. You are going to have to ask the lender if the state allows it AND if yes, then if they do it. Let’s compare Illinois… IN Illinois the law says that you can only get a title loan if the car is paid off with the exception that if you have a loan out from an existing title loan company you can get a new loan out from the same title loan company if you are within a few payments of finishing off the loan.
California? The law doesn’t care BUT the lenders do. Most lenders will allow it if the amount of the loan is going to be enough to cover the total amount being paid off. Because California has a $2510 minimum loan amount (yes that’s the law there), your car loan MUST be over that amount and STILL have paid off your car as well. So it depends on the state and lender and to find out, you are simply going to have to apply online and then either let the automated software tell you OR let the lender tell you after they check themselves.
7: DO YOU GUYS PULL CREDIT?
In most cases yes. Stop. don’t run away yet. There is usually two types of title loan companies who do it. Ones which SAY it doesn’t mean squat and do it (yet it does matter they just don’t want you to freak out yet until they have a chance at seeing if they can loan you the money with what they see) – AND – ones that really do look but are only looking to see if you are in active bankruptcy or in credit counseling.
Pulling credit is overcoming something inside that you will just have to get over. You have to know that if you give a title loan company the right to pull your credit (just like any company will ask for), chances are they will if they feel the need. You going all nuts about it is not going to make any difference at all. If you won’t qualify for a loan because your credit is just that bad, then what difference does it make anyway. It’s kind of like a doctor who has to look at the mole on your ass. You don’t want them to look there because it’s kind of personal and maybe a little ugly, but you know that they need to look in order to see what they can do. Just man-up, grow a pair and let them look. Geez.
6: WHAT WILL BE MY PAYMENT?
Assume 10-15% of the loan balance or thereabouts. So say you have a $4000 loan. That’s anywhere from $400 to $600. Alot of this depends on the company. I have seen payments as low as $150 on $4000 loans so it all depends on the company and how they structured the loan.
5: HOW LONG CAN I HAVE THE LOAN OUT FOR?
Title loans are for the most part monthly loans. Depending on the laws in the state, they can be renewed each month and go on forever OR have a cap. Some companies write the loans for 2 to 3 years if there are no legal reason not to do so.
4: WHERE ARE YOU GUYS LOCATED?
Our headquarters is in Wood Dale Illinois. That is 2 suburbs over from O’hare airport in Chicago. Our location is not that important. The lenders is and if you are going to worry about that you should be more worried about why you want a brick and mortar store which does all your loan process instead of a virtual one that sends you to signing locations or gives you an online title loan with a direct deposit into your account.
The facts is brick and mortar locations are expensive and make no sense. A typical store may write one or two loans a day and the store profits are not that much. They all have the building cost, insurance, legal fees, lot storage, employee costs and MOST of the time the person is just sitting there waiting for the next person to walk in. You know who pays for all that? YOU! In your loan with higher than normal interest rates!
If you are a smart shopper then go to one that has almost all of it automated and virtual. Each time you do a step electronically you are lowering the costs and thus lowering the interest rate.
A lot of companies are getting this concept lately. Airlines like Spirit Airlines now charge you a fee if you call in to reserve! More and more businesses are doing this because business is competitive so if you want to pay the highest possible rates you can… go to a brick n mortar location.
2: WHATS THE INTEREST RATE?
This grid SHOULD help you…
|State||Traditional Title Loan Allowed||Sovereign Lending type Title Loans||Min/Max Term||Min/Max Loan||Normal Monthly Finance charge|
|California||Yes (conditional)||Yes||Open||$2500 Min/||12%|
|Idaho||Yes||Yes||30 day max||$700 min||30%|
|Kansas||Yes (conditional)||Yes||7 day min/30 day max||$700 min||30%|
|Nevada||Yes||Yes||30 day max||none||20%|
|New Hampshire||No||Yes||Open||$700 min||30%|
|New Mexico||Yes||Yes||Open||$750 min||12%|
|New York||No||Yes||Open||$700 min||30%|
|North Carolina||No||Yes||Open||$700 min||30%|
|North Dakota||No||Yes||Open||$700 min||30%|
|Rhode Island||No||Yes||Open||$700 min||30%|
|South Carolina||Yes (conditional)||Yes||Open||$601 min/ $10,000||30%|
|South Dakota||Yes||Yes||Open||$10,000 max||30%|
|Texas||Yes (conditional)||Yes||Open||$700 min||30%|
NUMBER ONE: HOW MUCH CAN I GET ON MY CAR?
This is a VERY HARD question because it involves so many things. The reason why the question gets asked is because some people know that they may not qualify for a loan with the car they have because of age or mileage. Here is the down and dirty answer…
How much do you think your car is worth? Is it over $4500 if you had to sell it right now? Okay if so, take that number and half it. That is about what you can get plus or minus about $300.
Now if you want a more precise answer… then use what the title loan companies use. What you need to do is figure out the “auction value”. Here is an example. Let’s say you used your car as a trade in for a new one. The dealer is going to clean up the car the best it can and then take it to the auction. There is tries to get the most he can after people look at things like miles and condition. and the car history report. That is your TRUE cash value on the car if it was sold this very day. This is your true asset value.
Now take that amount and multiple it by 60-65%. THAT is what you will be offered for a loan.
The way to get your auction value is to go to kbb.com (Kelly Blue Book) and mark it as a trade in for pricing. Once you get that price, multiple whatever you see there by about 80% and that’s the auction value. Take 60% of that and you have the title loan amount…. or do it the simple way as I told you and use Kelly to figure out what the car is used in a private sale and half that. You will be pretty close.!
HAVE A GREAT SUMMER FOLKS. Get your money and use it for whatever makes your summer awesome. Never forget when you need a loan on title of car, just apply right here at Max Cash!