How do car title loans work? Everything you need to know about securities lending


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Emergencies happen at the most inopportune times. When you’re short on cash and have limited options for borrowing money, you’ll need to get creative. Owning your vehicle can earn you the money you need.

Car title loans are often a last resort option for people with bad credit. However, anyone can use this option if they meet the requirements.

How do car title loans work when you’re in a bind? They are a quick and easy way to get your hands on the cash you need.

Unlike payday loans, which must be paid off in a matter of weeks, car title loans are installment loans. Payments are spread equally over 6 to 36 months.

Looking for loan options? Keep reading for everything you need to know about title lending.

How do car title loans work? The answer varies from state to state

Before trying to get a car title loan, research the regulations in your state. Securities lending is illegal in 30 states. In places where they are allowed, the rules vary.

Some states set limits on how much you can borrow. Others set a grace period before a car can be repossessed for non-payment.

There are online financial services that will handle securities lending. Not all online services can issue loans in all states.

Your car is used as collateral

We can’t reiterate enough that your vehicle serves as collateral for car title loans. You authorize the lender to repossess your vehicle if you miss a payment. Some lenders place tracking devices in the vehicle to facilitate location in the event of the borrower defaulting.

Since you signed the title deed to secure the loan, you cannot get it back until all terms and conditions are met.

Loans are based on the blue book value of the car

The operation of title loans is simple. Once you have proven that you have a clear title to the vehicle, the lender will verify the blue book value of the car. In some cases, a vehicle inspection and a short test drive are performed.

Depending on the state you reside in, you can get the full Blue Book value up to a maximum amount. For example, if the car is worth $10,000 but the state maximum is $5,000, you can only borrow $5,000. In other states, the maximum is 50% of the value of the car.

If you have a vehicle over 10 years old that isn’t a classic or high-value model, it might not be worth it.

You must meet certain requirements

To get a car title loan, you must be at least 18 years old. In Alabama, the minimum age is 19.

You will need to have verifiable proof of income, which could be your last two paychecks. Finally, you may be asked to provide ACH authorization on your bank account or debit card.

Do you need a title loan?

Now that you know how car title loans work, do you want to apply online? The process is simple and quick.

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