What Is An Auto Title Loan

If you are searching for “What Is A Auto Title Loan“, this guide should help! With an auto title loan you will receive money based on the value of your car, which in this case, the collateral is your automobile title. You usually have a short time to repay. The lender holds the title to your vehicle, loans you the money, and gives you a set amount of time to pay it back in full with a small fee. The set amount of time to pay back is usually about 30 days, and these loans can be very expensive. If unable to pay what you owe, the lender can legally claim your vehicle is payment.

Other ways to borrow money/possible lenders for quick cash:

  • Friends
  • Bank
  • Credit union
  • Credit Card
  • Family

Also consider inquiring for an extension of due date for your bills, or contacting a credit counselor.

You are able to apply for a car title loan in their store or online, however, if you find yourself wondering how they work:

Step 1- Present to the lender:

  • Your Completed Application
  • Your Vehicle
  • The Title
  • Your Identification

Some lenders may require that you purchase a roadside service plan, and/or require a copy of your car key.

Step 2- Upon approval of your application, the lender will give you the loan and keep the title to the car.

Step 3- In 30 days, or whenever your loan is due, you pay the lender the amount borrowed plus the fee.

What is the cost of a title loan? Usually basing the monthly fee on a percentage of the loan itself, you may find yourself owing for up to 25% of the amount you borrowed, as shown below:

30-day loan of $1000 x 25% monthly fee= $1,250 Owed

Comparing Auto Title Loan Costs

An APR is an annual percentage rate that tells you how much it costs to borrow money for one year. Most loans having an APR, they can be quite high on car title loans. The loan lender is required to tell you the APR as well as the exact cost of the loan when you get a car title loan.

What APR is based on:

  • Money you borrow
  • The interest rate and/or monthly financial charge
  • The fee percentage you have to pay
  • The length of the Loan

Example:

  • A loan of $500 dollars, with a plan to repay the money in a year.
  • Comparing the costs of borrowing the money:
    • The credit unions, or banks, loan has an APR of 7.5%
      • In order to borrow $500, the interest would be $21.
    • There is an APR of 20% on a credit card
      • Borrowing $500 will hold a $56 interest.
    • There is a 300% APR for a car title loan.
      • This yields a whopping $1,111 of interest for a loan of only $500

What happens in the event that you cannot repay the lender when it is due? In some instances of not being able to pay the money back when it is due, lenders will let you rollover. Rolling over is a term used for an extension of the loan for another 30 days. Rollovers still yield a monthly fee that will be added to what you owe.

Rollovers can add up, if this is done several times, you may find yourself unable to pay off the loan. This is no good, now you have to pay a lot of money for such a small loan in comparison.

In the event that you are never able to repay your car title loan, a repossession will take place. The lender will acquire your vehicle, then they may sell it to cover the money you owe.

If you find yourself undergoing the repossession process, you are probably losing your only transportation. Not only that, but you could also be finding new troubles of difficulty going to school, work, or other important places.

Usually with a repay period of only a month (30 days), car title loans are a potentially expensive way to get small short-term loans. In the event of the inability to pay it back, you can lose your vehicle.

Before getting a Car Title Loan

Consider these options before pursuing a car title loan:

  • Can you use a credit card for your financial needs?
  • Do you have the ability to borrow from family or friends?
  • Have you saved any money that is usable?
  • Is a credit counselor an option, can an extension on the bills be an option?
  • Will the bank or a credit union offer you a loan?

If you are trying to choose how to borrow money, compare costs. If you find yourself to have a lot of different options, then acquire some details for each, such as:

  • The APR.
  • The Fees.
  • The length of time given for repayment.
  • Consequences of inability to pay.

Make a list of what you have learned from this, then weigh your options for the best path. In the event that you decide to pursue the car title loan, you should:

  • Ask about the APR.
  • Make sure you get the total cost in dollars.
  • Borrow no more than you can repay by the due date.

Find Auto Title Loans In The Phoenix Metropolitan Area

At Auto Title Loans USA, we have many convenient locations throughout the Phoenix metro area, including Scottsdale, Mesa, Chandler, Gilbert, Peoria, Apache Junction, and more. Best of all, if you can’t come to us, we can come to you. The process to get an auto title loan can either start here: auto title loans online, or just pick up the phone and text or call 888.426.0600.