Car title loans are subprime loans approved to borrowers with poor credit who use their auto equity as collateral, allowing consumers to borrow money based on the worth of their vehicle. while applying for a car title loan, you’ll have to show proof that you hold the title of the car. It is important that your car has a clear title and that your car loan is paid off or nearly paid off.
The debt is secured by the car title or pink slip, and the vehicle can be repossessed if you default on the loan payment.Some car title lenders may also require proof of income or conduct a credit check, bad credit however does not disqualify you from getting the approved. Car title loans are typically considered subprime because they cater primarily to people with bad credit and/or low income, and they usually charge higher interest rates than conventional bank loans.
The amount you can borrow with your car title will depend on the value of your car, which is based on its wholesale price. Before you approach a lender for the loan, you need to assess the value of your car. The Kelley Blue Book (KBB) is a popular resource used to determine a used car’s value.
This online research tool allows you search for your car’s make, model and year as well as add the appropriate options to calculate the vehicle’s value.Estimating your vehicle’s value will help you ensure that you can borrow the maximum amount possible using your car equity. When you use the KBB valuation as a baseline, you can correctly assess the estimated pricing for your used car.
The trade-in value (often equal to the wholesale value of the vehicle) will be the most helpful when you’re seeking a car title loan. Lenders will take note of this calculation to determine how much of that value they are willing to lend in cash. Most lenders will offer from 35 to 50 percent of the worth of the vehicle. This is because the lender has to ensure that they cover the cost of the loan, should they have to repossess and sell off the car.
Different states have different laws about how lenders can structure their car title loans. Most times, the law imposes interest rate caps on small loans up to $2,500. However, it is quite possible to borrow money in excess of $2,500, if the collateral car has sufficient value. In thiscase, lenders will typically charge higher interest rates.
When you cannot rely on your credit rating to get a low-interest loan, a higher-limit car equity loan can get you cash in time of a financial crisis. A car title loan is a good option when you need cash urgently and can offer your car as collateral.
Ensure you find a reputable lender who offers flexible payment terms and competitive interest rates. Most lenders will allow you to apply for the loan via a secure online title loan application or by phone and let you know within few minutes if you’ve been approved. You could have the cash you need in hand within 12 – 24 hours.