An automobile title loan is a way for bad credit customers to get an easy cash advance with no credit checks. Applicants will need to be over-18, have a sufficient income, have paid off more than 75% of any outstanding car finance, demonstrate proof of ownership and provide the lender with a duplicate set of car keys. Once the vehicle has been valued, a loan against car title will be provided for 25% to 50% of the available equity. The customer receives their guaranteed fast cash within 24 hours, possibly a lot sooner.
Advantages of Auto Title Loans
- Easy cash advance. After the vehicle has been valued, the applicant receives an auto pawn loan for several thousand dollars.
- Borrow more money. The borrowing limit is usually $1,000 for a same day payday loan. For example, if a car, motorcycle, boat or truck has a valuation of $12,000, the customer will be able to borrow between $3,000 and $6,000 in guaranteed fast cash.
- Speed. Once approved, a loan against car title is normally provided within a few hours of making the application.
- No credit check loan. The provision of collateral means lenders don’t need to perform credit scoring. This means that an automobile title loan is suitable for almost all bad credit applicants, including bankrupts.
- Borrow money for any purpose. There are no restrictions on what the money can be used for. A lender won’t ask for a reason for taking out a fast auto title cash loan at any stage of the application process.
- Continue to use the car. Provided that the repayments are made, the customer can use their vehicle for the duration of the loan.
Disadvantages of Auto Title Loans
- Interest rate. Guaranteed fast cash attracts a high rate of APR, typically 300% per annum. A number of states have prohibited auto pawn loans and others have placed a restriction on the maximum interest rate. For example, the APR in New Hampshire is capped at 36%.
- Repaying debt. Repaying the money borrowed will leave less money to pay the bills in the future. This can lead to the customer becoming trapped in a cycle of dependency.
- Repossession. Should the customer be unable to make repayment, the vehicle will be repossessed and sold to recover the loan against the car title. Any profit from the sale goes to the lender, not the borrower.
- Short term loan. The high APR means that a fast cash advance is only suitable for 30-45 days.
- Renewals. A very high percentage of customers are unable to repay the debt and have little alternative but to renew an auto title loan. In Oregon in 2002, 19% of all easy cash advances were renewed a minimum of 6 times.
Loans Against Car Title An automobile title loan provides guaranteed fast cash to help in the event of a financial emergency. There are no credit checks so an easy cash advance is suitable for customers with a bad credit history. The problem is that the APR is high and many of the borrowers are unable to clear the debt at the end of the term. A Missouri auditor discovered that for every new title loan on a car there were 3.5 renewals. Failing to make repayment will lead to repossession and sale of the vehicle.