Many people hold the misconception that getting a car title loan is complicated and miss out on the opportunity to get the cash needed in emergency situations. This type of loan is similar to getting a standard pawn loan, but there are some specifics to look at since the monetary amounts and paperwork are a little different. The process can be made easier by following the 3 simple steps below.
Make the Car Title Loan Amount Reasonable
The level of disposable income in any household is individual and can make all the difference when it comes time to repay a loan. Car title loans are not long term and have to be repaid quickly. This process in no way resembles an original loan to purchase a car. The Federal Trade Commission estimates that most car title loan amounts are between 25% and 50% of the actual value of the car. They suggest keeping the amount low enough that you do not risk what is most likely a huge asset to you and your family.
How much can you afford to pay back? It may seem tempting to ask for more money than you need without honestly assessing what it will cost to repay the debt. The lower the amount is that you need the faster the process will go. There will be less haggling over the true value of the car. The car title loan provider will be confident that you have the ability to repay and they are assured more than adequate return if you happen to default.
Budget for the Entire Cost of the Loan
According to TitleBucks, a large part of the decision-making process in determining your eligibility in getting a loan is the ability to pay it back timely. No one really wants to chase you down or repossess your vehicle. The ultimate goal of a car title loan company is to make money. This is the time to take an honest look at your household budget and plan for successful repayment. Will you have the funds available the following month for the base loan amount? What about the interest and fees? The ability to show that you can manage the loan within your budget will help you secure the loan easily.
Many car title loan companies allow you to roll the loan over to another month if you have problems coming up with the full funds. It will mean paying even more in fees and interest. Show that you are prepared for worst case scenario with your budget. It is much preferred by you and the loan company to roll the loan over than default. The better you can show that you have your finances managed the easier the car title loan process works.
Preparation Makes the Process Easy
Being prepared is both your best offense and defense. Know what to expect in the car title loan process so that you are not caught off-guard. You will need to bring the car title. Some companies accept titles that still have dealership liens, but it is best to find out before making the trip. You might be surprised at the other items you may need. Most companies will want a set of keys to the vehicle. This gives them access to the car in case you default. Many companies will demand that you have a roadside assistance service policy. This is needed in case of breakdowns and the car gets towed and impounded.
GPS tracking devices are often put in place so that the car title loan company knows exactly where to find the car if the loan falls into default status. Some people are uncomfortable with this, but it is simply a way to track the loan security when necessary. Make sure to set aside enough time that this can be done. You will also be required to show proof of valid insurance and are required to maintain that for the duration of the loan period.
Get the best out of the car title loan process by looking at affordability, preparing ahead and keeping things simple. This type of loan can be secured smoothly, easily and leave you with a pleasant experience when approached correctly.