You may have seen ads like this. If you need cash quickly, and have had trouble getting a loan at a traditional financial institution such as a bank, you may think that the answer is to take a loan on the title of your car. Many financial experts advise you to step on the brakes and consider other options. With a car title loan you will put your vehicle at risk: you can lose one of your most valuable possessions and your means of transportation.
A loan on a car’s title deed – also known as a pink-slip loan, or pledge or title pledge – is a low-amount, short-term, high-rate loan in which the free deductible title is used of your vehicle as a collateral warranty. It is a very expensive form of credit type. Some lenders offer loans on the title of a car if it has accumulated value in the vehicle, even if it does not have a title free of liens. Commonly, these loans extend for a period of 15 or 30 days and have a three-digit annual percentage rate (APR) – a much higher interest rate than those that apply to most other forms of credit. Loans on the title of a car are usually extended by an amount that varies between 25 and 50 percent of the value of the car. The average amount of these loans is between $ 100 and $ 5,500. But some lenders can extend loans for $ 10,000 or more.
How these loans are requested
The lenders that give credit on the title of property of a car operate in places of attention to the public and in Internet. Whether you apply for the loan in person or online, you will be asked to complete a loan application. Consumers who wish to apply for the loan on the Internet will be given a list of the businesses that offer loans on car titles near their homes. To complete the transaction, you will have to present your car, the title free of liens, a personal identification with photograph and a proof of insurance. Many lenders also demand the delivery of a duplicate set of car keys.
When you submit a loan application on the title of your car it is important that:
Review the terms of the loan. Lenders who give credit on a car’s title deed must give you the terms of the title loans in writing before you sign the loan agreement. According to the Truth in Loan Transactions Act applicable at the federal level, the loans on car title deeds have the same treatment as the other types of credit: the lenders must inform the cost of the loan. Specifically, lenders must inform you of the financial charge (expressed in a dollar amount) and the annual percentage rate or APR (the cost of credit on an annual basis).
Hopefully, now your knowledge is already enriched after you read this article.