Bad Credit Title Loan

Auto title loans are become increasingly easy to secure. They are short-term loans, and they use a vehicle as collateral. The lenders who offer such loans are not interested in the borrower’s credit score, so these loans are fit for those who have bad credit. For a borrower to secure a bad credit title loan, a person can either seek for lenders in town or online. The online version is more comfortable and gains more and more popularity.

To secure a bad credit title loan, the borrower needs one form of identification or another, a valid government-issued ID, such as a driver’s license, and a proof of a stable income. There are other requirements to secure such a loan: some form of mail to prove the borrower’s residency, car registration, a lien-free car title in the name of the borrowers, some references. Some states might require even having car insurance, though not all states do. The maximum sum a borrower can get is determined by the value of the collateral. Usually, lenders will offer up to half of the car’s resale value, and some will go even higher. However, the borrower must have a clear vehicle title, which means that the car needs to be paid in full and have no liens or any form of current financing. Some lenders also require a full insurance on the vehicle.

The interest rates vary from state to state, and from lender to lender. They range between 36% and sometimes go above 100%, which makes these loans some of the most expensive ones, almost as expensive as payday loans. Payment schedules are different from lender to lender, but usually the borrower has to at least pay the interest at each due date. When the term of the loan ends, the full outstanding amount could be due in a single payment. Again, this may vary. If the borrower cannot repay the loan at this time, they can take out a new one, known as to roll the balance over. Most of the times there is a limit to this, for borrowers to not remain perpetually in debt.

If the borrower doesn’t pay back the loan or is late with the payments, the lender is entitled to take possession of the car and sell it to recuperate the money. But lenders only choose this option as a last resort, for many reasons. It may take a long time to recover the vehicle, months and months, and the costs with repossession, auction and court make lessen the amount of money lenders will get back. In most states, law requires the title loan lender to hold the vehicle for 30 days before selling it, so the borrower may pay the loan and recuperate the car.

However, bad credit title loans should only be considered as an emergency, and paid as soon as possible, to avoid the high interest rates and various commissions.