A car title loan - also known as a pink-slip loan, or title pledge - is a low-rate, short-term, high-rate loan in which the free title is used of your vehicle as collateral. It is a very expensive form of credit. Some lenders offer loans on the title of a car if it has accumulated value in the vehicle, even if it does not have a title free of liens. These loans typically run for a period of 15 or 30 days and have a three-digit annual percentage rate (APR) - a much higher interest rate than those applied to most other forms of credit. Loans on a car's title deed usually range from 25 to 50 percent of the value of the car. The average amount of these loans is between $ 100 and $ 5,500. But some lenders may extend loans for $ 10,000 or more.
How these loans are applied for
Lenders who give credit on a car's title deed operate in public service and on the internet. Whether you apply for the loan in person or on the internet, you will be asked to complete a loan application. Consumers who wish to apply for the loan on the internet will be given a list of business premises that offer car title loans near their homes. To complete the transaction, you will need to present your car, the title free of charge, a personal identification with photograph and a proof of insurance. Many lenders also require the delivery of a duplicate set of car keys.
When you submit a loan application on the title of your car it is important that you:
Review the terms of the loan. Lenders who give credit on the title of a car must give you the terms of the loan in writing before you sign the loan agreement. Under the Truth in Loan Law applicable at the federal level car title loans have the same treatment as other types of credit: lenders must report the cost of the loan. Specifically, providers should inform you of the financial charge (expressed in dollars) and the annual percentage rate or APR (the cost of credit on an annual basis). The annual percentage rate (APR) is based on several factors, including the amount you borrow, the interest rate and credit costs that apply to you, and the length of your loan. In addition to the financial charge, car title loans may also include other expenses, such as processing fees, documentation fees, late payment charges, loan origination charges, title fees, and pledge charges. car.
Beware of those "extras" that can increase the cost of the loan. In addition to the costs of the loan, you may have to face the payment of additional costs such as a car help plan. The cost of the plan can be based on the value of the loan. If you are required to purchase additional, your value will be part of the APR / financial charge, which will further increase credit costs. In addition, the additives themselves can be costly - and can add considerable amounts to your loan.
Once the loan is approved, you receive the money and the lender receives the title of ownership of your car. You will not be able to recover the title of your car until you finish paying the loan.
Loans on the title of a car are expensive
On average, lenders typically apply 25 percent per month to fund the loan. This means an annual percentage rate of at least 300 percent. And depending on the additional charges that the lender may require, the rate could be even higher. For example, if you take a loan for $ 500 over a period of 30 days, you could on average pay $ 125 plus $ 500 of the original loan amount - $ 625 plus any additional charges - within 30 days of receipt of the loan.
Payment options
Generally, you have three payment options: in person, through an online system or through an automatic reimbursement system.
If you opt for an automatic refund plan, you must authorize the lender to debit your regular payments directly from your bank account or debit card on the due date of each payment. Providers can not make recurring automatic debits unless you agree in advance to make these transfers from your bank account - and they can do so only after giving you a clear information statement about the terms of the transaction. The provider must give you a copy of your authorization for
