Borrowing money can represent a challenge, especially if the applicant has bad credit. An automobile title loan involves using the equity in a car to get fast emergency cash. It is an any any-purpose loan that is suitable for a poor credit history due to there being no credit checks at any stage. Conventional lenders perform credit scoring in order to determine the risk of the borrower defaulting. However, the provision of collateral (the car) means that this isn’t necessary for a vehicle title loan.
Getting Approval for an Automobile Title Loan
- Most lenders require applicants to be 18, possibly 21.
- Some vehicle title loans will only be available to those who are in full-time employment. However, others will simply seek proof that the customer is in a position to repay the debt.
- Whilst clearing vehicle finance is normally a basic requirement, an auto pawn loan may still be available if there is less than 25% left to pay.
- Proof of vehicle ownership will also be required.
How to Get an Auto Pawn Loan
- The value of the car will be assessed using an internal process or the Kelly blue book. Although most customers want their fast emergency cash as quickly as possible, it is advisable to check with several providers as valuations and the terms of lending are likely to vary considerably.
- After the valuation, it will normally be possible to get a vehicle title loan for 25% to 50% of the available equity. The figure is capped as lenders want to make sure that there is sufficient equity to cover any interest and charges in the event of default. There is also scope for the customer to renew the borrowing agreement in the event of financial difficulties.
- Most automobile title loans tend to be for over $2,500. This is because customers can get a pawnbroker or payday cash loan for up to $1,000.
- Any paperwork will need to be signed. The customer will also hand over a duplicate set of car keys and the car title. A quick cash advance will normally be provided within the next 24 hours.
Cost of a Vehicle Title Loan
- The APR for an auto pawn loan can be as high as 300%. This makes repaying the debt difficult and regularly leads to its continued renewal. A Missouri auditor found that there were 3.5 times more renewals than new loan agreements.
- The usury rate of interest means that the borrowing term is normally 30 to 45 days. Depending on the worth of the car, APR and how much is borrowed, the term can be extended.
- Almost half of U.S. states have prohibited automobile title loans and others have placed limits on the maximum rate of APR to protect consumers from unfair lending practices. For example, the maximum annual APR in Iowa is 35%.
Defaulting on an Auto Title Loan for Fast Unsecured Cash
An auto vehicle title loan is a secured debt. Failure to repay the principal and interest punctually will normally lead to the repossession and sale of the vehicle. Any profit arising from the sale will be kept by the lender. Financial difficulties are the leading reason why so many auto pawn loans are renewed.
You often hear horrible things about payday loans and the establishments that provide them. They are rip offs, they screw people over, they try to trick you into extra fees, they get people caught up in an endless debt cycle, they are designed to keep poor people poor, etc. All these things are said about instant loans, but, when it comes down to it, there are some benefits involved as well.
If you are in a financial bind and in need of a loan, whom can you turn to? Some people have good credit and can turn to their financial institution for a traditional loan or a line of credit, while others might turn to friends and family.
But what happens if you do not have these options available to you and you need cash fast? Finding a lender that provides bad credit payday loans might be your only solution.
Unfortunately this is the case for many people who are down on their luck and in need of financial rescue. If this is your current situation, it is important to understand that there are some benefits involved with seeking bad credit payday loans, as long as you only seek this option in emergency cases. Using payday advances for any other reason can be risky and can lead to problems.
Payday loans are a quick and easy way to get cash when you find yourself in the middle of a financial bind. They are short term and generally issued in small amounts, based on your income.
They were originally created to assist people with fast cash to make it to the next payday. Many people use bad credit payday loans to cover unexpected expenses that occur due to car trouble, medical interventions, or unpaid bills. They are often viewed as negative, but they do bring a number of benefits.
- Bad credit – If you have bad credit or no credit history at all, it can be hard to get a traditional loan. Banks and credit unions have set standards to qualify for a loan, especially if it is not backed by collateral, such as a house or car. If you default on a no collateral loan, the bank does not have the means to get their money back like they would with a car or house. Payday lenders take the risk of lending to people who might have bad credit or no credit. Their loans do not require a credit check and cannot hurt or help your credit score unless you default.
- Qualifications - As previously stated, payday loans do not require a credit check, so qualifying is easy. Most lenders only require proof of income (either a check stubs, or bank statements) and proof of identity.
- Quick and easy - Payday lenders can provide you with cash in less than twenty-four hours. If you go to a payday lender, you can generally walk out with cash in an hour or less. This can be helpful to people who are behind on bills and need the cash instantly or need to pay for car repairs in order to get back on the road. Online lenders generally provide you with the loan in less than twenty-four hours if you have a checking account and can receive direct deposits.
- Limit – Payday loans are limited to a portion of your income. A payday lender will not lend you more than you make, which keeps many borrowers within their means. They also do not require that you specify what the loan is for, so you can use the money to help pay for anything you want.
Payday loans can be beneficial to someone in a financial bind when they are used wisely.