In times of an urgent financial need, one option that borrowers have is the car title loan. While not as well-known as the traditional bank loan, a car title loan is a fast and effective method for accessing much needed cash. Before deciding on taking out a car title loan, consider each of the following very carefully.
- How much money do you need?
Car title loans are great when you have a need for several hundred to a few thousand dollars. Most title loan companies will only allow an applicant to borrow 50 percent of the vehicle’s value. If you need $20,000 and your car is only worth $15,000, an auto title loan is not going to work. Likewise, if you only need $500 for a plumbing repair, a title loan will surely work but you may want to explore other options first.
- Is your title clean?
A clean title is one that is free of any liens. That means the vehicle is not being financed or another lien has not been placed upon the title. If so, then the vehicle is proper collateral. If the borrower defaults on the title loan, the lender can take possession of the vehicle and sell it to recover its losses. If there is an existing lien on the title, technically that lien holder is the owner of the vehicle.
- What paperwork is necessary?
Obviously, a potential borrower must have the title to the vehicle. Title loan companies like Embassy Loans of Florida, will verify that the vehicle identification number (VIN) matches that shown on the title. Borrower’s will need documentation to prove their identity and residency and, in some cases, must have documentation related to income.
- Research various title loan companies.
There are a number of car title loan companies in the market. Do your research before choosing one. Search for testimonials and reviews of the companies that you are considering. Embassy Loans has been one of the Florida’s leading consumer finance companies for many years and has a reputation that speaks for itself. Choose a title loan company wisely.
- Pay close attention to the payment schedule.
When final loan documents are signed, the terms of the repayment schedule are included. Borrowers must understand when payments are due and how much of the payment goes toward the principal and how much goes to interest. Borrowers can use this information to pay their loan off and pay it off quicker than anticipated. Not paying attention to the payment schedule can result in a borrower losing their car or truck.