Are you one of the over 250 million Americans (88 percent of the population) who own a car?
If yes, you’re certainly loving the perks of car ownership. Your commute is way easier and there’s nothing quite like speeding down the highway during summer.
But owning a car is more than just that. If you run into a financial jam, you can use your car’s title to secure a loan. If you’ve never taken out a loan with a car title before, you might be wondering how the whole process works.
We’re here to help.
Continue reading to learn how to get a loan with your car’s title only.
You Need a Clear Car Title
Having a car title isn’t enough to secure you a loan. You need to have a clear title. This is to mean, you’re the sole registered owner of the car.
If you have an auto loan, as most car owners do, you co-own it with your lender. Once you finish paying off the loan, the lender drops out of your title, leaving you with a clean title.
In some cases, though, you can still secure a car title loan even when the title isn’t clear. This happens when you’ve got positive equity in the car. This means the loan balance is far less than the market value of the car.
However, if you have to go in for a car title loan when you don’t own the asset outright, you’ll need to get the consent of the other owner; otherwise, the loan will fall through.
You also want to ensure your car has no lien placed on it. If there is, sort it out before you approach a lender.
Get Adequate Insurance
Since title loan lenders don’t keep your car while you repay the loan, they need to ensure its comprehensively insured.
This way, they are assured that you’ll get another vehicle in the event that your current one is stolen or totaled after an accident.
Find a Suitable Lender
There are several lenders offering car title loans, from traditional lenders, such as banks and credit unions, to online companies. You shouldn’t fall for the lender you first come across.
Do your research to find the best title loan company. Get recommendations from friends who have taken out title loans or go online and search for the best lender.
Some of the important factors to consider include interest rate, loan terms, and whether the company will allow you to keep driving the car as you repay the loan.
Ideally, you want a lender that offers the lowest interest rate. You also need a long repayment period, at least three years. Finally, the lender must not ask to keep the car until you pay off the loan. If they do, that’s a pawnshop, not a title loan company.
Secure a Loan with a Car Title
Getting a loan with a car title might seem daunting if you’re not familiar with the process, but it’s pretty straightforward. As long as you’ve got a clear title and your car has a good market value, any title loan company will want you to be their customer.
All the best and keep reading our blog for more money tips and hacks.