If you’re in need of some quick cash, one option to turn to is taking out a car title loan from a local title lender.

Car title loans can be a great option for quick cash because you do not need to reveal your credit score or financial situation. All you need is the title to your car to use as collateral against the loan that you want.

While car title loans may seem identical, there are certainly things to keep in mind and consider when you are choosing with local title loan to pursue.

Before breaking down things to keep in mind, you should know exactly what car title loans are.

Essentially, a local car title loan offers quick cash (typically somewhere between $100 and $5,000) in exchange for your vehicle’s title, or proof of ownership, as collateral. Car title loans are a type of secured loans, and many lenders can provide you with 24 hour title loans. That means that if you don’t pay back the lender within the repayment term, your lender is legally allowed to repossess your car.

What makes a local car title loan an attractive option for those in need of quick cash is that they are relatively non-restrictive when it comes to people who are able to apply and qualify.

Lenders typically do not check credit scores and don’t even necessarily require proof of income, proof of bank accounts, and more. All they require is that you can prove your equity in your car. True Financial is a lender that is able to help with car title loans for older cars

On caveat is that the vast majority of car title loan institutions will require you to own your car outright. One other thing that you find is that some lenders will require that borrowers either leave a key to their car or install a GPS tracker or a remote immobilizer in your car. This makes it easier for your lenders to find and repossess your car in the event that you default on your loan.

If you have decided that taking out a car title loan is right for you, there are some things you’re going to want to consider.

Title Loans are Only Available in Half of the States

If you are interested in taking out a local car title loan, you’re first going to have to find out whether or not the state that you live in even allows them. Due to their short payment terms, lump sum repayments, and high annual percentage rates, title lenders are only legal in 25 states across the country.

This is certainly something you consider before you opt to take out a car title loan. First off, you’re going to have to find if you can even access a local title loan. Also find out if your lender allows you to apply for a title loan with no job.

Look for Hidden Fees and Compare Interest Rates

A vehicle loan can be fairly straightforward. While the interest rates are high, there should be very few hidden fees, if any at all. If you find that there are hidden fees in a local car title loan that you are considering, it may be best to look elsewhere.

Similarly, as you would with any other type of loan, make sure to shop around and compare the interest rates offered by other local lenders. While all interest rates connected to car title loans will run a bit high, they do vary lender to lender. The higher the interest rate, the more money you will pay overall. Because car title loans are easy to obtain, it is definitely worth it to take the time to find the best interest rate available to you to save you money in the long term.

Title Loans Have High Annual Percentage Ratings

A loan’s annual percentage rate, or APR, is basically a way to measure how much a borrower can expect to spend on a loan in interest and other fees if the loan were to remain outstanding for a full year. What a 300% APR means is that if you are unable to pay off your loan, within a year you can expect to owe 3 times what you originally borrowed in fees and interest.

Technically, local car title loans are typically meant to last for a very short time – usually a few months. Within that month-long repayment term, interest rates are typically around 25 percent. Where people get into trouble is when they cannot afford to pay back their loan within the agreed upon payment term. That leads to the loan rolling over to the following month with another 25 percent interest tacked on to whatever is left. Before long, you’ll owe a boatload in interest and will be well on your way to that 300% APR nightmare becoming a reality. This can lead to a dangerous cycle of compounding debt that will leave you in an even tougher financial predicament than you were when you initially took out your loan.

The Amount You Can Borrow Depends on Your Car

You may think that the amount of money you can qualify for will vary from one local car tile loan institution to another, but typically the amount of money you can qualify for will remain fairly consistent across the market. That’s because the amount you can borrow is directly dependent on the value of your car. In fact, lenders can consider the car’s value that can be used as the collateral as well as provide the funds that typically vary between thirty percent to fifty percent of the total value of your car. That’s because if you default on your loan, and your lender decides to sell your car to recoup the cost, they are going to take the easy sale, not the sale that gets them the most money. That usually means selling far under value.

Look for the Experienced Companies and Look into Consumer Testimonials

When you’re choosing which local title lender you would most like to work with, definitely try to focus on companies that have been in business for a few years rather than a few months. Some lenders have been in business for over a decade. If possible, it is better to go with a company with years of experience, trust, and reputation.

Beyond that, it is best to see if a potential local car title loan institution offers testimonials from pervious customers. You should take the time to read through several of these to get an idea of what you can expect from a loan. Lenders that do not offer any customer testimonials should raise a certain amount of suspicions. Smart and reputable lenders will publish tons of testimonials, because they know that the proof is in the pudding. 

Your Vehicle Is Security For Your Loan

This is another thing to consider when choosing whether or not to take out a local car title loan.  When a borrower cannot pay back their loan, the lender has the option of repossessing their vehicle. 1 in 5 people who take our car title loans will ultimately end up watching their cars attached to the loan get repossessed. This will likely only increase the difficulty you are facing regarding your financial life because now that you don’t have a car, you could face even greater trouble getting to your job, or any interviews you have regarding a new job. Be sure to only apply for such loans if you know you have the ability to repay the loan quickly – such as some money you know is coming in from inheritance or sale of an asset

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