What you need to know about Auto Title Loans
Auto title loans, like payday loans, have become very popular with consumers who need money fast. The loans are readily available through many online lending institutions and, for those who qualify, the loan contract can be completed quickly and the funds that have been borrowed can show up in the borrower’s account usually within 24 hours.
That’s fast and it probably sounds as if it’s easy to do, as well. It is easy … but it can also be a dangerous loan and one that is extremely expensive. Briefly stated, an auto title loan enables you to borrow money based on the value of the car that you own; the car that you’re willing to risk losing if you default on the loan.
In fact, when you take out an auto title loan, you are essentially putting up your car (and the title to it) as collateral or security. Miss a payment or two – default on your auto title loan – and your car immediately becomes the property of the lending institution from which you’ve borrowed money. They can sell the car and they can also sue you for breach of contract … in an effort to recover the remainder of the loan (even though they have profited from the sale of the car).
As you will discover if you successfully apply for an auto title loan, the lending institution takes every precaution to protect itself and its financial interests. You will be required to sign over the title of your vehicle to the company that lends money to you. They will have the legal right to hold on to the title until you have fully paid off the loan. Once you’ve made payment, the title will be returned to you. And remember: if you fail to make payments – in other words, if you default on the loan – you will lose the car.
Here is something else to think about. The lending institution is likely to ask you to make up a duplicate set of car keys so that it has a full set and can take control of the car immediately if you don’t meet your monthly obligations. Clearly, the risk you take with an auto title loan is great, but the benefit you enjoy is also great.
You can borrow money, usually up to a fixed percentage of your car’s value – quickly, easily and almost always hassle-free. That’s because you don’t need to visit a bank or a lending institution … you can apply for a loan online. It’s simple to do and if you’re approved (chances are good that you will be approved) the money can be in your personal account within 24 hours … generally the very next business day.
Importantly, once it reaches your account – electronically – it’s available to you immediately. That’s right … you can access the funds and begin using them, for any purpose, at once. That’s the positive about auto title loans. You can get money to meet a personal financial need, usually within 24 hours, without going through the lengthy and often difficult in-person process associated with banks.
The negative about auto title loans is that you can lose your car if you miss payments. That’s the risk. The decision is, of course, your alone to make.