How To Choose a Title Loan Lender

February 8th, 2011 |

Title loans give quick cash in your hands and that means you can pay off any emergency needs. With title loans, you will not be required to have the same documentation as other personal loans. For people in tough situations without any means of cash, employment or credit, a title loan is their only option.

A vehicle does not necessarily have to be brand new in order to be useful for a title loan, but it does of course have to contain enough value for the loan in question. Lenders often seek a variety of resources to find out the value of the vehicle.

Upon realizing the value of the vehicle, the lender creates a contract for the borrower to sign. It is vital to understand that lenders actually benefit from repossessions and hiked interest rates, as some lenders have actually taken up to 300% more than the loan itself.

However, title loans are not meant to be very loan term at all. Title loan lenders are required by federal law to disclose their interest rates as an annual percentage rate (APR) and not in a monthly rate.

Do not get tricked by gimmicks. It is important to distinguish between these two rates and focus on the APR for your title loans. Once you know your APR, think over once again if a title loan is your only option. These types of loans are truly for those with no other means.

Before we check on which lender to go to, you have to know first the requirements. The basic ones are the unencumbered title of your car, proof of income, and driver’s license. Some may ask for a proof of billing such as utilities bill. More strict lenders may ask for the spare key of the car.

This will enable them to readily take possession of the car should you default in payment. Some lenders also have a policy on car models. Unless your auto is a classic one which appreciates in value over time, then earlier car models may not qualify. This is the basis of the amount of loan that one can borrow.

And let it be known that you cannot borrow an amount representing the market value of your vehicle – it is just a percentage of the prevailing value of the pawned vehicle. Many lenders grant up to 50% of the market price, some may even go lower.

Your lending institution can either be a bank or a private lending company. Today, the latter has become very prevalent. This is the reason why auto title loan becomes an easy process – they are in competition. This is also the reason why you, as borrower, can usually haggle for better deals in terms of amount of loan, interest rate and repayment scheme.

This is the big difference when you go to a bank for your car loan. The loan value, loan interest and amortization payment cannot be negotiated. Banks have definite policies on loans and to deviate from this policy will entail a long process. Besides, one request may not merit any deliberation for a change of deal.

And the biggest difference between these two lenders lies on the amount of time you have to wait to get hold of the proceeds of the loan. Private lenders can release the money faster. These lenders do not do credit checking anymore. Even if you have a previous bad credit payment record, you can still be granted a loan.

Banks will always include in their requirement a good credit standing; thus background check on borrowers is done prior to approval. And this may take some time. This accounts for the expediency of the release of the proceeds from private lenders. Many private lending institutions can release the loan in a matter of an hour.

If you are in need of emergency funds and you have a car, securing a loan is now very easy. Aside from the banks, you can go to private lenders. But the bottom line is – scout and inquire for better deals. With the competition around, private lenders are more than willing to accommodate you.

About the Author

Jack R. Landry has a PHD in financial services and has written hundreds of articles relating to consumer services and Money Centers. He has been a consumer advocate for nearly 25 years.

Contact Info:
Jack R. Landry
JackRLandry@gmail.com
http://www.checkcity.com