Title Cash Loans | ACFA
If you own a car and require cash, a car title loan may be the best choice.
Title cash loans are a quick way to get a loan. But be careful high-interest rates can make it expensive.
A car title loan is similar to a payday loan. The loan is short-term, usually for 30 days. In exchange for it, you give your car title to the lender.
Title loans are attractive as they don’t require credit checks. The entire application process takes between 15 to 45 minutes. The loan approval process takes between 15 and 45 minutes. You can then drive your car.
What is the title loans process?
Title loans are only available to those who have equity in their vehicle.
What is your maximum loan amount for a title loan?
The average amount that you can borrow is between $100 and $5500. Some lenders will let you borrow up to $10,000.
Once you are approved for a loan, you will need to give the title to your car to the lender. If you default on your loan, these two methods can help lenders repossess your car.
A typical term for a loan is between 15 to 30 calendar days. They can be extended up to one year.
Title loans: Problems
Title loans can be a good option for those who have a short-term financial need. However, they come with some serious drawbacks.
Title loans are not cheap
The cost of title loans is high. Title loans are expensive. This does not include any fees that you may have to pay.
Although these short-term loans are expensive, the problem is much worse.
Title loans can create a cycle of debt
Lenders might offer to renew your loan or roll it into a new loan if you cannot pay the full amount. Additional interest and fees will be assessed for the new loan.
Let’s say you borrowed $1,000 and paid a 25 percent fee. You may be eligible for a rollover loan, which allows you to repay $250 of the $1,000 borrowed. You will have to pay $1,000 back, plus additional interest and fees.
Assuming the same interest rate, your next 30-days will see you owing $1250. These fees are not included in the loan amount
On average, Borrowers pay more interest and fees than what they borrow. According to a 2015 Pew Charitable Trusts report, the average title loan amount is $1,000, and the average customer fee per annum is $1,200.
Borrowers who cannot afford the entire loan amount could face additional problems as their monthly expenses rise.
You could have your car repossessed
If you fail to make your monthly payments, your car could be repossessed.
The lender can take your vehicle away if it’s not paying the loan amount.
Alternatives for Title Loans
Title loans are a great way to get quick cash access. However, you have other options.
- Ask your creditors to extend your credit terms. If your situation is temporary and you act in good faith and are honest, creditors might grant an extension.
- Negotiate your debt. Call your credit card companies if your situation calls for a loan. You might be able to agree to a settlement.
- Your credit card. Credit cards are a better choice than loans to pay your bills. Most credit cards don’t charge interest if your entire balance is paid each month.
- Apply to an unsecured personal loan. Personal loans have lower interest rates than titles loans.
- You can use your tax refund. Don’t delay filing if you believe you might be eligible for a refund of your tax if you took out a loan on a vehicle. Pew Charitable Trusts research shows that 21% of title loan borrowers received refunds for paying off their loans.
- Borrow money with friends and family. Pew found that 19% of borrowers borrowed money to pay off title loan debts.
Title loans are a quick way to get cash, but they can also be costly for the borrower. 20% of borrowers are repossessed because they have not paid their loan.