Just about everyone has experienced a financial emergency. Whether that means an expensive replacement, an unexpected bill, or a mandatory down payment, these emergencies could cost a lot of money that you just don’t have. When you’re in a situation where you need a large amount of cash fast, you may become frustrated and pressed for time if you’re not sure where to look.
Your access to emergency cash may be limited, especially if your credit is less than perfect or if you don’t have an account with a traditional bank or credit union. For small amounts, a personal loan from a friend or family member or a quick payday loan may satisfy your needs. But, when your needs demand more, what are your choices?
Luckily, if you have a vehicle, you have the convenient option of getting an auto title loan.
What Is an Auto Title Loan?
Also known as a “title loan,” is a type of short-term loan, similar to a payday loan in terms of its application process and turnaround time. But, unlike payday loans, these loans are secured. When a borrower signs an auto title loan agreement, they name their vehicle as the loan collateral. This reduces the risk for the lender and allows them to offer a much larger cash amount for the loan.
How Do Auto Title Loans Work?
Once the need has been established, the borrower completes an application with their local title lender. The amount of the loan is almost always based on the value of the vehicle being offered as collateral, but it is also influenced by other factors such as state regulations or business practices.
Some lenders begin the loan process by determining the wholesale value of the vehicle and measuring it against their terms of service. If the vehicle qualifies, the loan amount is usually determined by considering the year, make, model, and condition of the vehicle, as well as the remaining balance before the vehicle is fully owned. Once the final loan amount is agreed upon, the total is calculated to include all applicable fees, and the loan repayment date is decided.
Finally, both the borrower and the lender sign the loan contract. The funds are usually picked up on-site at the lender’s location, or the lender may offer to deposit the funds directly into the borrower’s checking account. Most online lenders that have no brick-and-mortar locations will require direct deposit.
What Are the Benefits of Auto Title Loans?
The main benefit to an auto title loan is that the borrower stays in possession of their vehicle for the duration of the loan. Auto title loan services allow for those borrowers in need of significant sums of money to have access to a secured loan, and still be able to use their vehicles to continue their daily routines. And, because auto title loans are not provided through traditional financial institutions, they are available to those without perfect credit, those who have recently re-entered the job market, and those who are on disability or retirement.