In today’s world, people have a hard time trying to make ends meet because prices are always going up. Even if you have a full-time job, it’s not enough to pay for everything you need every day, such as food, rent, electricity, and more. That’s why so many people are facing poor financial choices and are ruining their credit scores unintentionally. Even if you can fix your bad credit score, it will take a long time. And because of that, most lenders won’t approve your application upon checking that your credit history is terrible.
If you’re currently in a position where you need money due to an emergency, there’s another way for you to get a loan. One of the most popular today in some states is title loans, and you can now get online car title loans through a reputable lending company. But there are things you should know first before applying for a title loan. Read on to find out these important pieces of information before getting a title loan.
You Should Own a Car or Have Total Equity In It
A car title loan is a kind of loan where you use your car as collateral. So if you’re planning to get a car title loan, you should make sure that you own the car or have equity in it. The loan that lenders typically lend to you is about 25% of your car’s total value, so it can range from $100 to $5500. The loan is only short-term – from 15 to 30 days, but it may be longer than that. This kind of title loan also applies to other vehicles, such as motorcycles and trucks.
Car title loans are also called pink-slip loans, title pawns, or title pledges. The term pink slip came from the pink slips that car titles in California were once printed on. Aside from the car title, the lender will want to see your ID and proof of insurance. Once you get approved, you need to submit your car’s title to the lender.
Not Paying the Loan Means You Can Lose the Car
If you can’t pay for the loan and all its fees, the lender might roll you with another new loan. That means you incur more fees and interest into the amount you’re rolling over. For example, you have a $1000 loan with a $150 fee. If you cannot pay the lender after the 30-day term, you can pay for the $150 fee and roll over the $1000 loan you borrowed with a new 25% fee. If you continue to roll over your loan, you will end up in a vicious cycle of additional fees that will make it impossible for you to pay back.
And if you can’t pay off all of the fees plus the amount that you loaned, the lender can repossess your car. So you could end up paying for even more expenses if you want to get the vehicle back. That’s why it’s important that you pay off your loan as soon as you have the money to avoid the lender from taking your car away. Otherwise, you’ll be left scrambling looking for another means of transportation.