Cash Loans for Car Titles

March 18, 2013

Cash loans for car titles are risky, since they use your car as collateral and have high interest rates. Learn how to make car title loans work for you.

Car Title Loan Application Form

When it comes to cash loans for car titles, there are many things you should know before entering into one. These loans are also commonly called payday loans, cash collateral loans, or car title loans. They all mean the same thing, and can be used interchangeably. They require the use of your car as collateral to back the value of the loan. These loans should only be used in a case of emergency. Here are some tips and pieces of information you need to know.

Research

Research extensively the cash loans for car titles and the various lenders around. Car title loans are low risk loans for lenders, which is a good thing for you as well. This means that there are many lenders out there who will do car title loans. You should look around at length for the right place, because interest rates on these loans are high, so you want to take the time to find a lender with the lowest rate.

Interest Rates

The interest rates on these loans can be killer. Cash loans for car titles are typically a short term loan, not lasting longer than 30 days. Because of this, lenders charge a high percentage rate to ensure that they make money. The percentage rate they give you will be the monthly rate, which may look okay on the surface. They may say 20 percent, but that is a monthly figure. You need to multiply that by 12 to get the annual interest rate, which would be 240 percent APR. This is absurd, and is a real danger on these loans. If you cannot pay back your loan in time, you will probably see an interest rate increase to an even higher level.

See what kind of interest rates you can get >>

Value

The car title loan amount is determined by how much your car is worth. A lender will normally allow you to borrow up to half of the car's value. This is because if you default on the loan, they will repossess your car and sell it themselves. That leaves them room to ensure that they get back at least what they paid out for the loan. Make sure you get a fair price for your loan. They also may require that you add some more insurance to the car, since they will be holding the title while you still get to drive the car.

Dangers

As you can see, there are clear dangers with this type of loan. If you default after the period, which is usually 30 days, they have every right to take away your car. However, they may allow you an extension, in which case you will have more time to pay. You will then have to pay an even higher interest rate, and you will end up paying sometimes double or triple what the original loan was worth. If you can't do that, you may lose your car.

How Is the Car Title Involved?

When you apply for this loan, the car is the collateral, and the lender will hold the car title until the entire loan is paid. In order to get this type of loan, you need to own the vehicle free and clear, and not have any other type of financing or loan on the car.

Watch for Scams

Because these loans are very high risk, you need to be careful of scams. If you are living from paycheck to paycheck, and all of a sudden a deal comes around that is too good to be true, watch out. If you think about finances only in the short term, you may think this loan is a good deal, but unless it is an emergency, you need to be careful. You do not want to be locked into debt that could take years to pay off.

Get Counsel on Car Cash Loans

If you should need cash quickly and are looking into a car cash loan, talk to a financial counselor and get some advice. You may be able to work out a plan for emergencies, so that you are protecting your assets instead of putting them further at risk. If you are as knowledgeable as you can be about your assets and the loans, then it is unlikely that you will get a bad deal on a loan. The type of cash you can get with these loans is anywhere from $100 to $1,000 dollars.

Finding the Money

If you do get this loan, make sure you only get as much money as you need. With the rates and terms of the loan, this should just tide you over for the moment. You don't want to be paying off the loan years from now. Think about exactly how much you need, and then go over your own finances. Is there any way you can reduce the amount, or hold off on purchases until your next payday? Think about what you really need.

Car Cash Loan Companies

If you have determined that you need the cash now, try to get it from a reputable company. Do not answer ads you see online. It is worth it to take the extra time to attempt to find a decent deal on this loan.

CarsDirect Financing
CarsDirect helps more credit-challenged customers find car loans than any other website in the country. The company works with a network of dealers who specialize in car loan financing. The dealer has access to a number of financial institutions and will shop around to find you the best deal. Just fill out a simple application and you will be on your way to receiving a car loan.

Advantage of Cash Loans for Car Titles

  • Quick cash. The biggest advantage of cash loans for car titles, or car title loans, is that you can get quick cash. These are the fastest turnaround time for loans. You often can have your money within a few days of your agreement. This is due to the car cash loan process being a very simple one. The lender just has to appraise your car and then tell you how much they will give. If you accept, that is it. You will have your cash within a day or two from most places.
  • Easy eligibility. Anyone with a car is eligible for a car cash loan. Your car is used for collateral for the loan. Similar to borrowing off your home, you borrow money off of your car's value. Typically, lenders allow you to borrow up to 50 percent of the value. This is so that they can still get their money back in case you don't pay them for the loan.
  • No credit needed. Another great part about car cash loans is that your credit does not matter. Since you are doing a pawn deal in essence, they have collateral in case you default. Anyone can get a car cash loan this way, because their credit history won't affect their chances at getting the loan they need.

Disadvantages of Cash Loans for Car Titles

  • You may lose your car. If you do default, there is a very real chance that your car is taken away as payment. Even if you are a day late, they can take your car. Once this happens, you won't be seeing that car again. As with any loan that is based on collateral, you always run the risk you will lose that asset.
  • High interest rates. The interest rates on a car cash loan, or a cash loan for car title, are astronomical. They may say that they are only 20 percent or 25 percent, which in a time where you need cash quickly, you may be willing to pay. However, most auto cash loans are month long loans, that's it. That means you are looking at the equivalent of 300 percent APR, which is outrageous. Just imagine signing up for a credit card with 300 percent APR. There is no way you would do it. Some states have, or are trying to pass laws that make it illegal for car cash loan lenders to have hundreds of percents of APR. Other companies have limits, but car cash loans work around the laws that are in place. Lenders are supposed to tell you the interest rate in terms of APR, which is the annual interest rate. Remember, if it is a monthly rate, multiply the number by 12 to figure out the APR.
  • Loan rollovers. As said before, these are often month-long loans. Considering that many people who take these loans out have bad credit, they likely can't pay it back that quickly. This causes what is called a rollover period. Interest rates skyrocket during this period. This then turns into possible or actual repossessions of your car. If you are considering this loan, make sure you can pay it off in the time period allowed. When you sign your name, you are giving them your title, and usually a copy of your keys. If you don't pay, they have every right to take your car from you. In some cases, lenders have installed GPS systems and then remotely shut down the car on those people who did not pay on time.
  • Extra fees. There are many fees upfront, like a processing fee and document fees, which add up. Some are flat fees, regardless of the amount of your loan. If you are only borrowing a little bit, you still may have to pay hundreds upfront.
  • Deception. The deception of car cash loans is that you can get cash really quickly. However, as quick as you get it, you need to pay it back. You must weigh the risks before getting involved. Plan ahead to make sure you will have the money to pay it back, or else you can be in for some real problems.

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