Online car title loans can be a useful financial resource for people who need to borrow cash for a short period of time. Flexible lending policies and relatively relaxed minimum qualification requirements combine to make this type of loan a more viable alternative than traditional loans, particularly for folks with low credit scores or past bankruptcies.
Before filling out any paperwork, however, it would be wise to acquaint yourself with some basic information about auto equity loans. The more you know beforehand, the better equipped you’ll be when it comes time to compare rates and determine which lender offers the best deal. Towards that end, here is a brief list of online car title loans FAQs.
What are online car title loans?
This is a short-term loan secured by your vehicle. In most cases this means an automobile, truck, SUV, or van, but some lenders also accept boats, RVs, or jet skis as collateral. You must possess a free and clear title to the vehicle in order to apply.
Are auto equity loans the same thing?
Yes, the basic framework of the two loan types is very similar. The main difference is that you can apply for auto equity loans even if you do not own your vehicle outright.
Do I qualify for a loan?
While the only way to get a definitive answer is to actually go through the application process, you can certainly estimate your chances by honestly evaluating your situation against the minimum requirements. These differ by lender, but generally speaking, you must be 18 or over, have a job or other steady source of income, have a valid driver’s license and Social Security card, and have insurance for your vehicle.
What are the minimum vehicle requirements?
Again, you should check with each lender about their specific policies. To qualify for most online car title loans, the vehicle must be in good working order, must have a blue book value of $2,500 or more, and must not be more than 10 years old. For auto equity loans, you will be required to have a minimum amount of equity, which can range from $2,500 to $5,000 or more.
How much money can I borrow through online car title loans or auto equity loans?
Prior to determining a loan amount, lenders will take into account the value of your vehicle and your current income, as well as your potential ability to pay each installment on time. Giving you a loan for an amount that is beyond your repayment capabilities would hurt both parties.
How long does approval take and when will I get my money?
Many lenders are able to approve or deny your application within 1-3 business days. If approved, the money will be sent to your bank account by wire transfer and you will be able to access it as soon as the transaction is completed.
Will I be able to drive my vehicle during the loan period?
Yes. Lenders realize that you need a way to continue going to work so you can earn money and make your payments on time. You are therefore allowed to keep the vehicle and drive it as usual during the loan period.
How long is the loan period?
This depends on how much you borrow and how much time you need to pay back the principal plus interest. The period can be as short as 30 days or as long as two years.
What happens if I default?
Your first course of action should be to try negotiating with the lender for an extension. Many lenders are quite flexible in this regard, and might be willing to work out an alternative payment schedule for you. If that doesn’t work, the lender is entitled to repossess your vehicle to cover the remainder of your debt.
This list of FAQs (and answers) about online car title loans is by no means comprehensive, but should give you a better idea of what you can expect to deal with during the application process and beyond. Just make sure you read the fine print before signing any documents so you don’t get hit with unexpected fees or conditions.