Online Title Loans are available to most customers today in a few different formats. Traditional title loan companies are now offering what they call online title loans. A portion of the process is completed online, and a portion of the process is completed in person. There are also some lenders, including offshore lenders, offering online title loans where the entire process in completed online and through the mail. There are advantages and disadvantages to both types of online title loans versus traditional title loans. This post discusses how each type of loan works, the requirements, benefits, and costs to help you make a decision when considering an online title loan.
How does an Online Title Loan Work?
The first type of online title loan, from a lender that offers traditional loans, starts with an online application. This application is similar to the application you fill out when you visit a lender. It requires your personal and vehicle information. You submit the application and wait for someone from their underwriting department to review it. This is usually done quickly because Title Loans are one of the fastest and easiest ways to get a loan.
Once approved, the lender will send you a loan offer. The offer is contingent upon a vehicle inspection, identity confirmation, and signature on the title loan agreement. This part of the loan process is very similar to going to a brick and mortar lender. You will have to drive to the location designated by the lender to complete the process. This will include a vehicle inspection, providing your title, and signing the loan agreement. Depending on the lender, you may receive your funds later that day or within the next few days.
How does a No Inspection Online Title Loan work?
As mentioned, there are offshore companies offering online title loans that do not require a physical vehicle inspection and complete the entire process online and through the mail. This process begins with an application, similar to the previous type of loan, however it does require additional information. You will need to provide a copy or picture of your Title, Drivers License, and additional supporting documents (proof of income, proof of insurance, etc). Additionally, you will need to send pictures of the vehicle’s exterior, interior, and odometer.
Once they have all of your information, the title loan company will send you an offer letter and mailing label. You will need to print both of them. The offer letter usually has an identifying code on it. In most cases, you will place the letter inside the vehicle so the code is visible through the windshield. Then you will take a picture and send it to the lender. You will use the mailing label to send them your vehicle title. Your loan is processed and funded when they receive the title and verify the information you submitted. This process can vary and takes longer than visiting your local lender.
Benefits and Drawbacks:
As discussed there are two different types of online title loans. The first is a loan with a traditional loan company where part of the process is completed online. There is not really any benefit to this type of loan unless you can negotiate a lower rate as a result of the lender’s decreased overhead. If you are paying the same rate, you are better off just visiting the lender. You will get your loan funded that day, will not have to wait for the cash, and will have somewhere to go if needed to deal with any problems.
The benefit of the second type of online loan, the completely online loan, is that you do not need to leave your home. This assumes you can print out the necessary documents and mailing label. The drawbacks to dealing with an offshore lender for this type of loan include:
- Waiting for your funds.
- Going without a Title if there is a problem with the loan.
- Having no office to visit to make payments or corrections.
- Interest rates are usually very high.
- No regulatory body to report problems to.
Most completely online title lenders also require additional personal information. This usually includes your work address and contact number and several (sometimes as many as 5-6) references. Be aware that if you miss a payment with an offshore lender they may contact your work and any of the references you provided.
The costs of all three types of loans can vary depending on the Interest Rate and fees associated with the loan. In the states where title loans are permitted and regulated, the interest rate is usually capped and the fees are also limited. Still, the rates can vary significantly from to state and lender to lender. The fees associated with the loan and the interest rate may be high. Remember you are pledging your vehicle as collateral. It’s worth taking a look at how the lender operates and finding out exactly what your costs are. Also, don’t forget to find out how to make your payments and the process for getting your title back. These vary from lender to lender as well.
Online Title Loans can be a convenient option if you are willing to deal with the potential drawbacks. This may be a viable option if you live in an area that does not have local title lenders. As with any title loan, make sure to do your research first and find out the reputation of the lender you choose to do business with. Feel free to use our Title Loan Calculator to estimate costs associated with the loan. Over time, the reduced overhead associated with online lenders should bring rates down. Unfortunately, convention business rules have not applied to this type of business. If they did, several lenders (competitors) within very short distance should have already decreased rates. Only time will tell.