Auto title loans have been around for ages with offices in many states across the country. This sector is currently undergoing a revolution and embracing technology to the hilt. A lot of providers have now put up their own websites to reach out to a broader clientele. These sites don’t just give information but also allow people to apply for a loan in the comfort of their own homes. This is convenience at its best. What’s more some have also been launching their own smartphone apps that enable potential clients to see how much they can borrow for their car as well as the payments they would have to make per month.
Auto Title Loan in Detail
Let’s step back a little bit and specify what a title loan actually is. It is in essence a form of secured loan. The lender provides a certain amount to the borrower and is in turn given an item of value as security. In this case it is the title of a car which serves as collateral. The loan must be paid back in order for the owner to reclaim the title. Failure to do so could result in the repossession of the vehicle. In practice repossession happens rarely. People are generally given the chance to extend their loan — a process called “roll-over” – though they will incur substantial fees as penalty. More tips can be read here.
Laws on Auto Title Loan
Consecutive roll-overs could snowball into an impossibly large amount so some states have placed a limit on the number of times that this can be allowed. Without this limit borrowers could get buried in a pit of debt for life. If the debt is still unpaid by the time that the limit is reached then the lender will have no choice but to recover the car and try to sell it to get their money back. This is a stressful process on both sides which should be avoided as much as possible. Fortunately repossession actually occurs quite infrequently in practice based on studies.
Remember that in order to be eligible for this loan the car must have already been fully paid. One that is still in the middle of financing will not be accepted. The borrower must prove personal ownership of the vehicle by providing a copy of the vehicle registration and other related documents. The car must be insured in accordance with state requirements. Not all states permit the operation of title lenders because of the high interest rate they impose. Some reject these loans outright while others regulate them. Only about 20 states let the lender carry on in their jurisdictions.
The secret to a successful auto title loan is to borrow small and pay fast. Even if the value of the car allows a much bigger loan stick to the immediate financial need and repay the lender at the earliest possible time to avoid costly penalties.