You’re relieved that your car and steady income will likely qualify you for a title loan, potentially getting you out of a situation for which you need fast cash. Looking ahead, you would want to erase that debt swiftly, should you incur it. To help you, here is what you should know about title loans, including how to clear your balance as quickly as possible.
What are Title Loans?
To define terms, title loans are usually due in 30 days or less – longer terms may be available — and are secured by your vehicle’s title. That means that although you can still drive your car while you’re making loan payments, your vehicle could be lost to seizure if you don’t make said payments. So be sure you can afford the loan before taking one out. Once you pay the loan off, plus interest, you’ll get your title back.
How Much Can I Borrow?
That depends on your vehicle and income, plus the state in which the lender’s located. Each title lender is different, but they all generally consider several factors including the car’s make, model, age, mileage, and overall condition. The lender will also consider any modifications or alterations, as well as the vehicle’s style.
In lieu of having you take your vehicle in for an inspection, most title lenders will allow you to simply submit recent quality photos of the car from all angles, plus shots of the odometer and vehicle identification number.
The lender will also determine how much to lend you – and whether to lend to you – based on your income. After all, it wants to see that you’re able to pay the loan back. To that end, you’ll need to submit paystubs or bank statements. If you don’t have a job but have other steady income, that’s likely acceptable as well. Sources can include, for example, Worker’s Compensation, Social Security, child support, alimony, rental property, self-employment, retirement account, etc.
What lender decisions will not be based on is your credit, although the company might look at it. Because the lender has your title, it isn’t as concerned about risk.
Ultimately, most loans are for between $100 and $10,000, with the average being around $1,000. Depending on the state and lender, you could be offered up to half your vehicle’s value.
How Fast is the Process?
Title loans can be turned around in 24 hours – an industry hallmark, particularly compared to how long it takes for traditional bank loans to be processed. Once you’ve applied online, you’ll likely hear back the same day, if not within minutes. Once you’re approved, you can have cash in hand by the next day.
How Can I Pay the Loan Off Quickly?
You’re right to want to pay off your title loan as soon as possible, both to avoid vehicle repossession but interest charges as well. Rolling over your loan will only increase your rate further.
Consider these tips to help you pay off your balance fast:
- Borrow what you need. You may be offered more than you thought you would. Still, try to stick to the amount required to see you through your emergency.
- Include the payments in your budget. Your vehicle is involved here, so loan repayment must be a high priority.
- Round up your monthly payment. If your contractual payment is $169.89, pay $200. These seemingly insignificant overages will pay off over time.
- Make an extra payment. Particularly if you have longer terms or have rolled over your loan, double up on payments when you can.
- Curb spending. As convenient and expedient as these loans are, you want to pay one off asap. Curb discretionary spending until you have your title loan repaid.
In summary, title loans can be life savers, so to speak, when you either can’t get a bank loan or don’t have the time to await one. Just be sure to pay the loan off, and as soon as you can.