Auto Title Loans – How they Work

Auto title loans - approved

Auto Title Loans, also know as car title loans or pink slip loans, are an easy way to borrow money using your vehicle. Auto title loans are very easy to be approved for. They allow you to get cash the same day to cover emergency or unexpected expenses. This article discusses how much you can get with an auto title loan, how much they should cost, reasonable fees, how to deal with lenders, and also provides some useful information for repaying an auto title loan. We cover auto title loan requirements, and how to get an auto title loan in other articles.

Auto Title Loans – How much can I borrow?

The amount you can borrow with an auto title loan is directly related to two important factors. The first is the vehicle value. Different states have different limits, but they are usually between 25% – 50% of the vehicle’s value. The second factor is the amount you can afford to repay. A credit check is not required for an auto title loan. As a result, the amount you can afford to repay is based on your income. Income can be from any source. If you do not have any income, you may want to consider an alternate to a title loan.

Maximum Auto Title Loan Amount – Tip

Sometimes a lender will lead you to borrow the maximum amount you are approved for. This is usually done regardless of how much you actually need to solve your financial problem. A tip, borrow only what you need, regardless of what the lender tries to get you to do. Auto title loans are expensive, therefor you should keep the original loan amount as low as possible to meet your needs. This will help make the loan more affordable.

Auto Title Loans – How much should a loan cost?

Auto title loans are expensive when compared to other loans, but this doesn’t mean you should overpay for a title loan. Just like any other service, it pays to shop around. Fast Title Lenders, for example, provides auto title loans at 8% per month, a fraction of what most lenders charge. A $1,000.00 loan for 12 months costs under $1,600.00 to repay. The same loan with one of the larger lenders that charge over 15% per month interest costs well over $2,000.00 to repay. Some lenders charge even more and a $1,000.00 can cost as much as $3,000.00 to repay. Does it make sense to re-pay double or even triple what you borrowed just to get fast access to cash with no credit check? We don’t think so.

Reasonable Fees:

Auto title loans can sometimes have excessive fees related to the loan. Application fees, processing fees, late fees, Debit card fees, GPS fees, convenience fees, etc. Additionally, some lenders require purchasing insurance or other roadside assistance products from them to get the loan. These fees can quickly add up and can be excessive. The only fee we consider reasonable is the fee associated with recording the lien on the vehicle. The lender has to pay this, and it is reasonable for them to recover this fee from the borrower. If your lender is charging more fees, consider choosing a different lender.

Auto Title Loan Calculator – Find out your costs

We founded Fast Title Lenders to provide a reasonable and transparent alternative to the lenders charging double or triple the principal. To provide each of our customers with accurate we costs we developed the Auto Title Loan Calculator, which provides a detailed cost estimate for different loan amounts and terms. Another benefit of our calculator is that it allows you to see the cost of any title lender’s loan as long as you know their interest rate.

Cost Tip:

As a general rule, if your repayment amount for an auto title loan is double what you borrowed or more for a 12 month loan, we consider that unreasonably high. For example, if a $1,000.00 12 month loan costs $2,000.00 or more to repay, you should seek another lender.

Auto Title Loans – How to get Approved

Getting approved for an auto title loan is easy compared to other loans. In fact, the whole loan process can be completed in about 30 minutes in most cases. To start the process, fill out an application with your lender. Most lenders allow you to complete at least part of the application process online. Some lenders also off Online Title Loans, where the whole process is completed online. These loans have both risks and benefits, as we discussed in our post about online title loans.

Dealing with Title Lenders

Auto title loan lenders have a negative reputation for a reason. Not all lenders are deserving of this reputation, unfortunately you will need to do a bit of research to figure out which lenders are. Many of the large lenders have a history of charging very high interest rates and treating their customers poorly. A few years ago it was easy to find out how a lender treated their customers, you simply read their Google reviews online.

Most lenders figured this out and find a way to drastically increase the number of 5 star reviews. When a customer was finished with the loan process, but before the funds were dispersed, the lender asked them to please give them a 5 star rating. Borrowers are anxious to get there funds and be on their way so most do just that. Unfortunately if the borrower has a bad experience during repayment of the loan they have no way of changing the review they already left. These types of reviews are not honest assessments of the borrowers experience with the lender.

This is where sites like Ripoff Report and the Better Business Bureau are useful. Reviews on these sites are usually after the borrower has had the loan for enough time to perform an honest assessment. You can get an idea of how a lender treats their customers by reading reviews in sites like these

Conclusion

If you own your vehicle and need access to cash quickly you may consider an auto title loan. Before moving forward make sure to find out about how your lender treats their customers and how much the loan will cost. It is critical to do this before you sign the loan agreement. For more information about auto title loans and more tips on getting an auto title loan feel free to visit our site.