By Bobby Hays
If you’re in desperate need of fast cash and are interested in using a vehicle that you own as collateral, taking out a car title loan could be a great option for you.
Car title loans are fast and easy when it comes to the application and approval process. The downside of that ease is that car title loans can get rather expensive depending on the interest rate you agree to with your lender.
That’s why it’s important to find out how the get the best car title loan rates available to you. The difference between a good interest rate and a bad interest rate could mean the difference between hundreds or even thousands of dollars based on the total value of your vehicle.
Before covering how to get the best auto title loan rates, it’s important to know exactly what a car title loan is.
Basically, an auto title loan is a short-term loan that uses the car that you own in full as collateral. Because it is a secured loan, the vast majority of title lenders around the United States do not require applicants to undergo credit score check, provide proof of employment, or even have a bank account. Even if a lender does act you to undergo a credit score check, that check likely won’t have an impact on your approval.
Even more, because car title loans are secured loans, borrowers can typically get more cash than they could for something like a payday loan.
To qualify for a car title loan, borrowers must have the title to their car. That means that they don’t currently have a loan out on their vehicle. In order to get your own auto title loan, you will most likely follow these steps:
- You apply either online or at a lender’s location.
- The lender will do an appraisal of the market value of your car and offers you a maximum amount they are willing to lend. The lender will likely offer you just 25% to 50% of the actual value of your car.
- You will get your cash you need and then begin planning to repay your loan based on the loan term.
- If you do not repay your loan on time or miss a payment, you will risk having your car repossessed by the lender.
The one thing to keep in mind is that car title loans can get rather expensive. That’s because of their high interest rates. While repayment terms are typically just one month, if the interest rates involved are expanded to a year, most borrowers can expect their loans to carry a 300 percent annual percentage rate.
That’s just the average, though. It doesn’t mean you have to pay that much!
So, now that you know the basics of all car title loans, let’s go over how you can work to get the best car title loan rates so you can start getting going today.
Just in case you don’t already know, the interest rate is essentially the cost you pay for borrowing. That means that it determines how much a borrower pays back to the lender of the life of a loan. Better interest rates mean a lower payout. The lower the interest rate, the less you will owe in the future.
So, how do you get the best auto title loan rates? It’s all about proper preparation and research.
The first thing you’ll want to do is shop around. Just because one lender offers a certain interest rate, doesn’t mean that the rate is the same across the maker. You’re going to have to do research to find out the different auto title loan rates in your area. When you are looking for rates, it is important to not forget to consider other relevant fees.
For example, a company might offer
Once you feel you have found the best option for you, you can decide to move forward with that lender.
The next thing you will want to do to find the best car title loan is to consider the loan term. This can have a huge impact on the interest rate. Short terms might seem ideal at first – and it is true that with short-term loans you typically pay less overall – it is important to consider that they also often come with higher interest rates.
For car title loans, the lowest interest rates typically come with loans that range from 12 to 36 months. While you will be paying quite a bit more by the end, a longer payment term will give you more time to pay back your
Finally, the last thing you’ll want to do is check your credit score. While credit score checks are often no required when it comes to being approved for a car title loans, if you want to get the best rate available, your lender is probably going to have to check your credit score.
The better the score, the lower the interest rate you can expect to be offered by lenders. If you are interest in improving your score, you’re going to have to obtain your credit report to make sure there are no errors. If you find any, you will have to get in touch with the major credit bureaus to get those errors removed from your report. It can be quite the task, but it’s worth it if you are truly interested in getting the lowest possible interest rate.
The truth is,