To some, a car title loan may be hard to figure out, but for its purpose, it acts like any other loan, which is a sum of money that can be used by the borrower for whatever they needed it for but is put under an agreement where over a certain period, they must repay the loan with interest.
A car title loan applies to the same definition, but what makes it different is to how it can be received, and how it does not adhere to certain restrictions in the process of certain loans. A car title loan does not base its decision of giving a loan to a borrower by their credit score or employment history. That’s where the “car title” of the word comes in to place.
Your car title, which is that little diploma thing with your name on it that proves you are the legal owner of the vehicle, is one of the main requirements. That little document however, is like the deed of the house. In short, your car title is under the lender’s control, but you still have control of your car.
That’s because it is used as collateral. If you keep up with your monthly payment plans for the loan, then you can continue driving your car while the lender has their financial security of the deal by having that title, until you pay off the loan.
Simple isn’t it? Well park your brakes, as we delve into the intricate parts of a car title loan, and the inner workings that could help you decide if a car title loan is an option for getting fast cash that you need now.
How does a car title loan work?
As previously mentioned, a car title loan does not depend on you having good credit or bad credit because you are essentially using your car as collateral. But what does that mean? It means that if a borrower defaults on their payments and cannot pay off the rest of the car title loan, their car could be repossessed (depending on if their state allows a lender to do so).
So how does a car title loan work? Well like any other loan, a car title loan has a borrower pay monthly based on a set-schedule agreed to by the borrower and the lender. The amount on the car title loan payments also depend on interest. Interest is that economics word that adds up based on the amount of time a loan is paid off for.
This means that the higher your interest rate, the more you are likely to pay, which is why we at Max Cash Title Loans recommend everyone to find title loans with lower interest rates. Not to mention that depending on your state, there may be limits about how much money you can receive or how much a lender can charge on the loan or even the repayment period’s length.
For example, a state like California has very restrictive guidelines for lenders that want to give a car title loan to borrowers, while also giving some restrictions to certain borrowers. Not to mention it is also one of the states that allows lenders to repossess someone’s car if they default on their payments.
With all this talk of interest rates, principal, and other words you probably wouldn’t know about, there are also hidden fees to look out for when getting a car title.
These hidden fees could be placed on your car title loan, and can be hard to detect, but here are just a few to look out for when looking for a car title loan lender:
- Late penalties: If you are late for any of your scheduled payments, a fee will incur on your payments, adding more money to a car title loan you may be struggling to pay for.
- Balloon payments: A type of short term trick used by some car title loan lenders that leaves a portion of the principal balance to be amortized over the entire term of you car title loan, only to leave a huge final repayment that may be difficult for you to pay.
- Credit report fees: Some lenders may charge you for running a credit check during the application process of your car title loan.
- Appraisal fees: This is a fee service charged by a lender if they inspect your car to check its value.
With all these things to keep in mind when finding the right car title loan, it could be overwhelming for someone that lacks the experience and understanding of car title loan lenders and the loans themselves. That’s where we at Max Cash Title Loans step in and can help you on your search through the world of car title loans.
How can Max Cash Title Loans help find a car title loan for me?
Max Cash Title Loans is not a lender. But we are a “middle man” of sorts between you and the many lenders throughout the country that we consider close connections. We at Max Cash Title Loans are the bridge between borrowers and lenders for car title loans.
We also pride ourselves with years of experience in car title loans and use that combination of expertise and connections to bring you a few choices for car title loan lenders that match up with your financial situation. By using our application (we don’t charge any service fees either), we use that information to bring you our approved lenders and hope to give you some better options that maybe you could not have found on your own.