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Questions You Need To Ask Before Taking Out A Car Title Loan

If you are in need of some emergency cash or are looking for the last few hundred or a few thousand dollars to complete a large and important purchase, chances are good that you are looking to take out a personal loan of some kind.

One potential road block you could easily face when searching for the right kind of loan for you, is your credit score. If you don’t have a don’t have a strong enough credit score, many types of common personal loans may be impossible to gain approval for.

Because of that, you may turn to the option of seeking out car title lenders. If car title loans are present in your state, they can be a great way to get the money you need very quickly.

Depending on what you’ve heard about car title loans, you might be somewhat reluctant to take the chance. It’s true, they do come with some very real risks, but there are benefits to opting to pursue this type of loan.

What is a title loan?

Before going over how to find the best title lending companies, it’s important to know what exactly a car title loan is.

A car title loan is a secured loan in which the value of your loan is based directly off of the value of your car. After a lending company evaluates your car and the necessary documents such as proof of income, proof of residence, and a government issued I.D., you will be offered a loan. If you should choose to take it, you will typically have your cash in hand within a matter of hours.

It’s important to know that once you have your cash, it is common for payment terms for title loans to typically last from two to four weeks. Much less time than your typical unsecured personal bank loan.

Also, title loans usually come with very high interest rates, with annual percentage rates going as high as 300 percent. On top of that, it is always important to keep in mind that if you default, your lender will have the right to repossess your car as collateral.

With all that potential risk involved in taking out a loan against the value of your car, you’re going to want to make sure that you borrow from one of the best online lending companies available to you. Here are a few questions you are going to want to ask to get started while you are shopping for a car title loan company to know that you are borrowing from a trusted, experienced, and fair lender.

Does your potential lender offer competitive interest rates? 

Interest rates are crucial to pay attention to and one of the most important things to look for when comparing title loan companies. Interest will have a huge impact on the overall price of your loan greatly because they reflect the percentage of your loan that you have to pay on top of the cost of the loan itself while you pay off your entire loan.

The percentage can vary widely depending on what title loan company you are working with.

The average interest rate attached to a car title loan across the industry is around 25%, but that doesn’t mean you can’t find companies that offer much more reasonable rates. Still, even if you do find a lender with low rates, you will want to keep the rest of the tips discussed in mind to avoid any problems down the road.

Knowing what your interest rate is in a loan will give you the insight you need into whether or not you will be able to pay back the loan within the payment term. It will also let you estimate how long it will take you to pay back your loan, and how much interest you will accrue over that time.

Does your potential lender have loads of professional experience?

This is one of the first things you’re going to want to check when applying for a car title loan. As a customer who may have no experience or knowledge when it comes to taking out this type of loan, it’s important to work with professionals who understand the business.

One of the best ways to make sure that they know the ins and outs of the business, is to find out how long they’ve been in business for. Loans, interest rates, and payments can often be somewhat difficult to manage and it is important to find car title lenders who have years of experience working with you on the other end.

Do they have any hidden fees?

When it comes to title loans, it is important to make sure to read the fine print before you sign. Though many car title loan companies charge some kinds of fees upfront, many lenders also charge additional hidden fees that can really add up during the life of your loan.

When comparing companies, make sure to a get a quote from each car title lender before you eventually decide which car title loan company is the best for you. If you come across a title loan company that is wholly unwilling to give you a quote or reluctant to divulge what hidden fees you might encounter, you would be wise to avoid

Are they flexible?

Usually, people who are considering taking out a car title loan are doing so because they are facing a financial emergency and – due to a number of circumstances – have decided that taking out a car title loan is the best option for them.

That does not mean that taking out a car title loan alleviates all the pressure and stress that comes with that emergency. In fact, title loans – as with all loans – certainly come with their very own stresses and difficulties. Because of that, it is important to find title lending companies that are reasonable and flexible. It’s easy to work together when you’re trying to take out a loan, it’s much harder to feel like a team when you are working hard to pay it back.

The best online lending companies will be willing to make your loan work for you. Sometimes that may even require you to extend your payment period and accrue additional interest. If you ask a potential lender if they would be willing to work with you in that kind is situation and their answer is a flat no, you may want to consider looking elsewhere.

Can you find customer testimonials?

Another way to make sure you are dealing with a reputable car title lender is to check out the company testimonials from previous clients and customers.

If you do just a bit of online digging, it should be quite easy to find testimonials. The most reputable companies will often offer customer testimonials on their own sites. If they don’t advertise testimonials on their own sites, you can usually find them on company review sites. Beyond that, if you find yourself having trouble finding any kind of testimonials about a given company, it is probably best to stay away.

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