Benefits of Taking an Auto Title Loan
In 2019, 73.2 percent of Canadians reported that they had an outstanding debt of some type or had taken a payday loan at some point during the previous 12 months.
From these statistics, it’s clear that, for a significant portion of Canadians, being in a financial fix from time to time is nothing out of the ordinary. Thankfully, there are numerous solutions one can turn to when in urgent need of some cash. For instance, car owners can always apply for an auto title loan.
But exactly what is a car title loan? How does it work? More importantly, why should you consider this loan option over others?
If you’re asking yourself these questions, you’ve come to the right place. In this post, we tell you all you need to know about auto title loans.
Read on to learn more.
What Is an Auto Title Loan?
Auto title loans are secured loans that allow borrowers to use their vehicles as collateral. These loans are usually short-term and don’t have as many requirements as conventional loans. Because your vehicle secures your loan repayment, the lender typically does not do a credit check and cares less about your credit history, if at all.
It is importand to note that title loans can be obtained using cars, vans, trucks and pickup trucks. Motorcycles, snowmobiles, watercraft and classic cars can also be used, but they typically must be held by the lender during the term of the loan. These types of loans are called Storage Loans.
How Do Title Loans Work?
Any car owner can apply for a title loan as long as their vehicle is lien-free, in that there is no money owing on it. Part of the title loan application process requires you to show your lender proof of ownership of the car as well as your driver’s license. After approval, the lender registers a lien against your vehicle for the term of the loan and removes it once the loan is repaid.
Typically, your title loan lender will consult with you to determine the loan terms, so it helps to choose a reputable and understanding lender who is more willing to work with you to suit your needs. You will be required to make regular periodic payments that include principal and interest that pays off the loan with the last payment. There are cases where smaller payments are accepted with a lump sum at the end. Periodic payments can be bi-weekly, semi-monthly and monthly.
So, how much should you expect to get? The best lenders can give you up to 50 percent of the wholesale value of your car. The wholesale value is usually determined by looking at publications that the lender has access to. In addition, the title loan lender examines your car to determine what condition it is in and also takes that into account.
Why Should You Consider an Auto Title Loan?
Of all the short-term loan options available, what makes auto title loans so attractive? Here are six common reasons Canadians love car title loans.
They’re Easy to Process
Unlike conventional loans, the car title loan process is remarkably easy. As long as you own a car and it is lien free, you are eligible for the loan. All you need is to provide the vehicle’s registration and other simple documentation and the lender places a lien on the your vehicle and gives you the loan.
As soon as you repay the loan, the lender immediately removes the lien registered against your vehicle.
You Get Cash Quickly
After a few steps of the application process, the lender goes through the paperwork within a short time. Once they’ve approved the loan, you don’t have to wait long to receive the cash. Most lenders in the country pay the loan funds out immediately after the documents are signed. The money is needed now and that is how it is paid.
For borrowers in dire need of cash, the short time it takes for lenders to disburse the cash is a huge relief. Conventional loans can take weeks before money hits your bank account.
Your Credit Score Doesn’t Matter
Arguably the biggest hindrance for many people who want to take a loan is poor credit. The good news is that auto title loan institutions aren’t interested in your credit score. That’s because your car’s equity secures the loan.
Even if your credit isn’t stellar, you can easily get a loan as long as you own a car. Even better, some lenders allow you to borrow a loan amount higher than 50% of the value of the car, provided you can prove you have a steady source of income an are stable.
You Still Get to Use the Car
One of the commonest misconceptions amongst people who have never taken title loans is that they lose use of their car during the term of the loan. The truth is you’ll still be able to use your vehicle without any problem whatsoever from your lender.
The lender only registers a lien against you vehicle, which secures the loan and allows the lender to lend easily without going through all the credit checks and investigions that a traditional lender would typically do.
They Are More Affordable Compared to Cash Advances
A popular alternative to a car title loan is a cash advance otherwise called a payday loan. The biggest problem with these types of loans is that they tend to attract a high interest rate since they are unsecured.
When you take a title loan, the lender has collateral in the form of your vehicle. Because of this layer of protection, the risk involved in lending you money is lower, which means they don’t have to charge a high interest rate.
Repayment Options Are Convenient
Another significant benefit of car title loans is that the lender usually gives you easy and convenient loan repayment options and schedule. Most lenders allow you to pay through the following methods:
- You can make online payments through your title loan account
- You can use wire transfer or send a money order
- You have preauthorized payments set up to automatically come from your account
Typically the best way all around to have the periodic payment made is through the preautorized payments.
Generally, the length of the loan depends on how much money you can pay monthly. Shorter loan terms mean higher payments and vice versa.
What if you have a problem making a repayment? The smartest thing is to talk to your car title loan agent right away. If you are dealing with a reputable lender you will find a symathetic person on the other end of the phone if you are communicating.
Get Your Title Loan Without Hassles
Everyone has a time in life when they need cash quickly. It may be that an unforeseen bill came up abruptly or there’s an expense which you need to meet urgently. Applying for an auto title loan is one of the best ways to get yourself out of this situation.
Are you interested in getting a car title loan quickly and conveniently? Please contact us today.