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While this is one of the best ways to secure fast cash, you don’t want to rush into the process. You’re better off comparing the pros and cons, contacting several lenders, and then making a final decision when you have all the information you need.
The best way to clear the air is to answer a variety of questions pertaining to the auto title loan industry. Here are a handful of the most important:
1. How does an auto title loan stack up to other types of loans?
For example, you may want to compare an auto title loan to a payday or pawn loan. When doing so, pay close attention to:
- APR
- Repayment term
- Type of collateral
- Required documentation
Generally speaking, an auto title loan is much easier to obtain than most other types. The reason is simple: you’re using the title of your vehicle as collateral. This makes the process much easier for both parties.
2. What type of APR can I expect with an auto title loan?
This differs from lender to lender and is based primarily on your credit score. Generally speaking, your APR will fall somewhere in the 30%-165% range.
Your lender can work with you to better understand the rate you qualify for and the impact it will have on your monthly payment.
3. How long do I have to repay the loan?
This also differs by lender, but most allow you to choose a repayment term of up to 48 months.
The longer the repayment term the lower your monthly payment. However, a longer repayment term also means that you’ll pay out more money in interest.
Tip: ask your lender to show you the monthly payment for varying terms, such as 12 months, 24 months, 36 months, and 48 months.
4. Can you get an auto title loan with bad credit?
Good or excellent credit makes it easy to secure a loan, but many consumers aren’t in this position. Instead, they have a bad or fair credit score.
While a low credit score won’t disqualify you from securing an auto title loan, it’ll result in a higher interest rate.
Unlike other loans, such as a personal loan from a traditional bank, you can still qualify for an auto title loan if your score isn’t high.
5. What type of documentation is required?
It only takes five to 10 minutes to complete an application for an auto title loan. In many cases, you can do this online.
In regards to documentation, the lender will require the title of your vehicle and a driver’s license. As long as you have these two things, you’re in position to move forward.
6. Do I get to keep my car?
Many people hear the phrase “auto title loan” and assume that they have to give up their vehicle until they pay back the money. This is a myth.
With an auto title loan, you’re simply using your vehicle as collateral. So, as long as you stay current with your monthly payments, you’re able to keep your vehicle.
The only thing you have to worry about is falling behind on your payments. Since your vehicle is used as collateral, the lender has the legal right to repossess it should you not live up to your end of the contract.
Final Thoughts
There’s a lot to like about auto title loans. If you’re on the fence, answer the questions above to the best of your ability. This will point you in the right direction.
Once you begin to move through the process of obtaining an auto title loan, you’ll come to find that it’s much easier than most types of loans.
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This content is sponsored by Lovisa Alvin.
Photo: Shutterstock