Car title loans are becoming more prevalent these days as borrowers find traditional methods of borrowing money more strict. Banks and other financial institutions have made lending more difficult for the average person. Any individual with a car, truck, or SUV can borrow against its title. Obtaining a car title loan is relatively easy. What to do when you pay off the short-term loan is another matter entirely.
The Basics Of Car Title Loans
A car title loan is a secured loan where a vehicle serves as collateral. The lender places a lien on the title to the vehicle and if the borrower does not repay the loan, the lender has the right to take possession of the vehicle. Car title loans are very easy to obtain if you own a newer model vehicle that is in good condition.
Anyone with a newer model vehicle can use it to borrow money. Title loan companies prefer that borrowers own their vehicle outright. However, if there is a small balance on the loan, it is still possible to obtain an auto title loan. Once a person applies, he or she needs to prove their identity, residency, and provide the vehicle’s title. The vehicle will be appraised for its value and the final loan documents are drawn up.
No credit checks or background checks are necessary. Title loans are not based on credit. If a borrower fails to repay an auto title loan, the vehicle is repossessed and sold.
Recovering Your Title
At Embassy Loans of Florida, most title loans are processed within an hour. They are quick and easy to obtain. Most title loans are short-term in nature and there are certain steps that a borrower can take when the loan is paid off in full.
Most car title loans are set up to be repaid within 12 months. If they are not paid off in full within the time limit established in the loan agreement, the loan can be rolled over. Borrowers should do everything they can to avoid a rollover so they don’t pay even more in interest.
Once the loan is paid off, the borrower can recover the title to the vehicle. The lender will have had a lien placed upon the title when the loan was approved. The borrower needs to remove the lien to show that he or she is the legal owner of the vehicle.
When the loan is paid in full, the lender will issue a lien release letter. Borrowers must contact their state Department of Motor Vehicles and take the necessary steps to acquire a new title. The lien release letter will help a borrow obtain a new title that shows free and clear ownership.