If you’ve ever wanted to apply for a loan or a line of credit, you should know that there is a difference between the two. For example, if you apply for a line of credit, you won’t be receiving a lump sum of money. You will have access to those funds to dip into as you need it. Let’s say you have a line of credit and are using the equity in your house as collateral, the bank or credit union will set an interest rate for the funds that you borrow. If you have a line of credit for $50,000, but you only borrow $5,000, then you will only pay interest on the $5,000. The more you borrow from the $50,000 the more your monthly payment will be, of course. However, if you apply for a loan, you receive the lump sum that you requested. For example, if you take out an auto title loan, you will a lot of cases receive funds within one business day and you will be paying back that loan on a monthly basis for the full lump sum. So a $5,000 auto title loan will have a fixed monthly payment.
Online title loans are attractive to those individuals who have below average credit ratings. The reason why auto title loans are often chosen as a loan option by lower than average credit rated consumers is because of how easy it is to apply and get qualified. Some people confuse this with payday loans, and that’s a mistake. Payday loans usually don’t ask for collateral, whereas title loans require you to use your vehicle as collateral. To qualify for an auto title loan you must meet the following three requirements.
- You have to be lien-free of your automobile. In other words, the title needs to be free and clear of any liens.
- You have to show an ability to repay the loan. For example, you have to show that you’re employed.
- The lender has to make sure that the amount they are going to lend to you can be recouped if they need to repossess your car (if you default on the loan) and sell the vehicle.
In addition to the aforementioned requirements, you should also have a bank account where you can have the funds wired to. Once the underwriting team approves your application you will have to sign-off on the loan before terms become active. However, if you don’t have a bank account for the funds to be wired, you will probably receive your funds in a few days as the lender will need to mail you a cashier’s check.
Many question whether or not they have to go to a brick and mortar storefront lender to get an auto title loan, but those days are long gone. In fact, most auto title loans are done over the internet. When you apply for one of these loans, the lender is most likely doesn’t have a physical location in your state. However, if they can lend to you, they are licensed to do so in your state. Since most of the application process is done online the turn-around time is very quick and efficient. You could quite literally apply for a loan in the morning and have funds that same day. The whole process is a well-oiled machine.
If you find yourself in a situation where the approval process is taking longer than what we’ve described, it is typically from one of the following reasons:
- If you are using a salvaged title it can take a little longer (maybe a day or two). The lender needs to determine if there is any value in your vehicle.
- The interest on these types of loans are higher and they also have shorter repayment terms than most traditional loans. Due to this they need to verify that you can repay the loan. If the job you have or the income you’re receiving doesn’t show that you can repay the loan.
- Is your vehicle’s title free and clear? If there is still a lien on your automobile’s title then you won’t qualify for one of these types of loans. Before you spend your time seeing if these types of loans are what you want, make sure there’s no liens on your vehicle.
Before you apply for your loan, get a list of auto title loan companies. Read through our site to see if you understand how the these loans work. Know what the pros and cons are before you make the decision to move forward. Then have all your documents in order: your title information, your ID and details of your income stream. Make sure that the company that is lending to you offers you something that will fit your needs. When all is said and done, please make sure to pay your loan on-time, and may we suggest that you have your monthly payments automatically withdrawn from your back account (if possible). Some lenders will even discount your interest rate if you pay with that option.