Did you know you can use your car as collateral for a secured loan? In a car title loan, you can take a cash advance against your car and are still able to drive it. That may be an option if you need a loan fast. If you are considering a car title loan, it’s wise to pay attention to the interest rates on your loan. Let’s look at how car title loan interest rates are determined and how you can make the most of it.
Benefits Of Car Title Loans
If you are asking yourself, “are car title loans worth it?” you should start by weighing the benefits against the cost of the loan. That is particularly important because the stipulations of a car title loan are unique and end up being very different from other types of loans.
Car title loans offer some benefits from the very beginning. They are a lot quicker to process, sometimes only taking 15-45 minutes. That can help you access money quickly if you need it due to an emergency.
There is also significantly less paperwork for a car title loan than a personal loan. You don’t need a credit check, so it can be an option if you have poor credit.
Although it is called a car title loan, some lenders allow you to use other vehicles you own as collateral. That could include a motorcycle, boat, or RV. This range of options can open this type of loan to a wide range of people.
In general, the majority of these benefits boil down to speed. A car title loan can help you gain access to funds quickly and with minimal paperwork. If this sounds like what you need, then a car title loan may be something you want.
Interest Rates Determination
As with any loan, interest rates factor into the decision-making progress when it comes to car title loans. You should be aware of how interest rates work and how they will impact your specific loan.
Interest rates on car title loans are state laws. Thus, they will vary from state to state. When looking into your situation, make sure you keep your state’s laws in mind the whole way through.
In general, state laws cover loan duration, interest rates, and service fees. They may set upper limits on interest rates as well.
The payment plan you choose can also play a role in your interest rate. If you roll a loan over into a new loan, you’ll likely end up paying higher interest rates. Many lenders offer either single payment loans or installment loans.
If you have a single payment loan, you can repay the loan in full. Installment loans offer repayment spread out up to 36 months.
How To Find The Best Interest Rate And Terms
A lower interest rate can help you save a lot of money over the life of your loan. A difference of just a few percentage points could result in a difference of hundreds or thousands of dollars.
Individual lenders may offer higher or lower interest rates, so it is good to shop around for the best rates and terms. Check with both online lenders and brick and mortar lenders in your area. Compare and contrast these numbers to find the lender for you.
Once you choose a lender, carefully read over the terms of the loan. You should double-check the agreement for any hidden fees.
When getting the loan, you’ll need to have the car, as it may need to get appraised. You should also bring your car title or pink slip, valid identification, and proof of insurance. Ask your lender if they require any additional documents as well. If you want to learn more about finance in general, visit The Motley Fool!
Make The Most Of Your Car Title Loan
If you decide a car title loan is worth it, take action to make the most of it. Mismanaging your loan prevents you from fully utilizing it and can even cause you trouble down the road.
You should make sure to discuss the terms of the loan thoroughly with your lender. If you have questions, ask before you sign any paperwork. That will ensure you are on the same page and have a more pleasant experience.
As with any loan, you need to pay a car title loan back on time. If you default on your loan, your lender may and probably will repossess your car.
In addition, paying the loan back on time may help you save money on interest. Check with your lender if they have prepayment penalties and see how the time to repay the loan affects the rate. Many times, they will allow you to pay more than your monthly payment.
Find The Best Car Title Loan Interest Rates For You
A car title loan can help you get money quickly when you need it. Thoroughly understanding how car title loan interest rates work will help you make the most of your loan. Call Champion Financial Services to set up a free consultation to learn more about your options.