Car title loans offer access to fast cash while using your car as collateral. Knowing how title loans work increases your chance of getting approved while ensuring you understand the risks involved. At Swift Title Loans, we offer an online application you can complete 24/7, so your funds are ready when you need them the most.
It’s important to understand that you must own a car without any loans to qualify for auto title loans. The car must have enough value to borrow money from while leaving some of its value untouched. Most car title lenders allow you to borrow up to 70% of the vehicle’s value, requiring monthly payments to repay the loan.
How Title Loans Work
You can apply for a title loan within a few minutes, and get an answer instantly:
1. Apply for an online title loan
You can complete a title loan application online or call us at 1-800-557-7115 for assistance. The application requests information about yourself, your income, and your vehicle to determine eligibility.
2. Gather the necessary documentation
- To get final approval, you’ll need official documentation to prove you qualify for the loan. This includes:
- A government-issued ID, such as a driver’s license, state ID or passport
- Proof of your income, such as pay stubs, bank statements, or award letters
- Proof your address, such as a recent bill, mortgage statement, or voter registration card
- Proof of auto insurance, such as your most recent insurance ID card
3. Choose the title loan offer
You may receive several offers for a title loan. Evaluate the loan amount, interest rate, and fees and compare the monthly payment to your budget to see what you can afford.
4. Upload the necessary documentation
After choosing the best offer, you must upload the required documentation to prove the information you provided on the application.
5. Receive funds
Some title loans allow you to receive funds the same day you apply and get approved. This is the case if you complete the process by early afternoon local time. If not, most lenders fund title loans within one business day of final approval.
6. Make payments
Title loans are short-term loans that you repay monthly. Your loan agreement will detail the minimum payment required, the due date, and how to make your payments.
Can You Drive Your Vehicle When You Have a Title Loan?
As you learn how title loans work, it may surprise you to learn that you can drive your vehicle while you borrow money against it. This is possible because the car title lender puts a lien on the title, which prevents you from selling the vehicle until you pay the loan in full.
How Much Money Can You Get With a Title Loan?
Like personal loans or other bank financing products, the amount of money you can borrow depends on your qualifying factors. In this case, it depends mostly on the vehicle’s value and how much you can pay monthly.
What Are the Typical Repayment Terms for a Title Loan?
Some title loan lenders require a fast repayment turnaround, sometimes as quickly as 30 to 60 days. However, Swift Title Loans offers loan contracts that allow monthly payments for 12 months or longer.
If you wonder if you can repay a title loan early, the good news is that you can. In fact, most title lenders encourage you to repay the loan early to reduce the total interest paid. While you’ll still pay the loan origination fees required, you can reduce the total interest charges on the loan by paying it early.
Do Title Loans Affect Your Credit?
Title lenders don’t report title loans to the credit bureaus, just as they don’t rely on your credit scores to qualify you for the loan. However, if you don’t make your payments and the lender sends the loan to a collection agency, they may report the debt to the credit bureaus, damaging your credit scores.
Risks to Understand Before Borrowing a Title Loan
Now that you know how title loans work, it’s important to understand the risks involved in borrowing one:
- High interest rates: A title loan is a high-interest loan with rates over 100% in some cases. Be sure you know the total cost of the loan before accepting it.
- Damaged credit score: You may hurt your credit score if you miss too many payments and the lender sells your loan to a collection agency.
- Repossession: If you miss too many payments, the lender can repossess your car. They can then sell it to recoup the money lost.
FAQ
Are There Alternatives to Title Loans?
Exhausting all alternatives when applying for a title loan is a good idea. For example, if you can borrow from friends or family or get an unsecured personal loan, you may pay fewer fees and won’t risk losing your car. However, a title loan may be a viable option if you have bad credit or don’t have a steady job.
Do You Need Good Credit to Get a Car Title Loan?
Title loan lenders don’t focus on your credit score when getting a car title loan. They pull your credit but don’t require a minimum credit. Instead, they focus on your car’s value and your ability to repay the loan.
What is the Difference Between a Title Loan and Personal Loan?
A title loan uses your car as collateral. A personal loan typically doesn’t require collateral and bases your eligibility on your income and credit score.
Final Thoughts
Knowing how title loans work is important when deciding if it’s the right option. Title loans should only be used in emergencies when no other loan options are available. It’s important to exhaust your other options first because they have a high annual percentage rate and fees.
If you decide a title loan is right, complete an online application and get a pre-approval within minutes to determine if it’s the best choice for your financial needs.
