Title Pawn is also referred to as a title loan or car title pawn. It is a secured loan that permits borrowers to use the vehicles they own as collateral. Your car works as a security against the loan, which means that if you don’t repay the loan, the lender reserves the right to repossess your vehicle.
The vast majority of title loans are meant as a form of short-term loans, but ones that usually come with a high-interest rate. However, most people are attracted to these loans because they are easy to get. So, even someone with poor credit can still qualify for a loan as long as they own a vehicle and have active bank account details.
Now before you jump in and apply for title pawn online, there are a few things you’ll want to understand about how it works. This will also help you decide if this is the right loan product for you. Some people may also want to consider credit counseling.
How Does Online Title Pawn Work?
Like any other loan, you must apply for a title loan or title pawn via a lender. You will, for the most part, qualify for a loan as long as you own a vehicle. But this needs to be a lien-free vehicle. The online application process is generally a preliminary part of getting the loan. Once the application is approved, the lender will want to see the car, and you’ll have to prove ownership by showing your license and title.
Once the loan is approved, the borrower will need you to hand over the vehicle’s title in exchange for the money you are borrowing. While the lender determines the exact terms, title loans typically must be repaid within 30 days. This means you are required to make a lump-sum payment as soon as the loan period ends.
The amount you repay the lender is the principal amount plus interest and fees. Most lenders in the US charge a 25% monthly fee on top of the loan amount, which, if calculated, turns out to be a 300% APR. This is something that all borrowers should know before they apply for title pawn online because not understanding it means this simple fact can become a source of frustration.
The critical thing to remember is that if you don’t repay the loan, you will lose the vehicle, which is an asset for all intents and purposes. So, before you take out a title loan, be 100% or maybe 90% sure that you have the financial resources needed to repay the loan on time.
Title Loans Restrictions
The restrictions on car title loans will vary from one state to the next. Similar to other types of loan products like payday loans and installment loans, regulations protect you from online and offline predatory lending practices. While regulations may change, it is essential to be familiar with the regulations in your state.
In some states, you may not be allowed to use your vehicle as collateral for a title loan. However, this rule does not make sense, especially after you have submitted the entire application, filled in full, to find out that it can’t be approved because of your state’s rules.
The good news is that a simple Google search should reveal information regarding title pawn rules in your state. So, at the very least, you’d want to do this before applying.
The other thing you will want to know is the ARP and interest rates vary for every title loan company. These can be some of the most expensive title-secured loans available, so take the time to shop around to get the best deal. Apply for a few quotes so that you can compare the rates they are offering to choose the lowest-priced one. Some lenders will quote an ARP that is very near to what you get for a short-term loan, but others will quote ARPs that are around what you’d pay for a personal loan.
You will want to take the time to research all the terms and charges for the title pawn before you sign the contract. Ensure that the company allows you an early payoff of the full amount. This is important because if not, then paying early will mean that you also pay more money. However, if you can pay early and it’s part of what the lender offers, you can get the pink slip back and no longer have to worry about the vehicle being repossessed.
Keep in mind that a lot depends on how much cash you’re borrowing. Usually, it should be less than what the car is worth for you to be approved, and often enjoy a lower interest rate on the loan.
Why Is Title Pawn Online Better Than Getting It Offline?
While there are no significant benefits to getting a title loan online versus offline, the one advantage we see is that most online lenders will not check your credit score. This means there is a chance of being approved fast and not having to worry about your credit history losing a few points, which can be the case after each hard credit check.
An installment or payday loan often requires a good credit history, which means lenders will check your credit. However, when it comes to title pawns, having poor credit is fine because the lender is assured that your vehicle is worth at least what you have borrowed, which lowers their risk. That’s why many people with bad credit see title loans as an alternative to payday loans or other unsecured loans, which may require good credit for a favorable interest rate.
Final Word About Getting A Title Loan
When in the market for title pawn online, you will want to do a fair bit of research. There are quite a few lenders that offer this type of title loan, but they all don’t have the same policies and interest rates as we’ve noted above. Some people, as mentioned earlier, will want to seek credit counseling before determining if this is the loan they should take out to meet urgent expenses.
You will want to get quotes from multiple companies and compare what they offer against each other to find the best one before applying. However, just as necessary should be the ease of application. If it’s going to take you an hour to fill out the application form online, you’re probably better off finding another lender that makes the application process easier… trust us; there are many!
Frequently Asked Questions (FAQs)
Q. Do lenders approve title pawn applications from borrowers with bad credit?
A. Yes, they do. Bad credit does not automatically disqualify you from being eligible for a title pawn like it can for unsecured loan amounts such as cash advances. The same goes for if you have no credit at all. While valid credit history is essential for most loan products, it isn’t mandatory for a title pawn. Usually, that’s because people applying for title pawn have been previously turned down for other types of personal loans.
A title pawn is based on the resale value of your vehicle, so having bad credit isn’t factored into the lender’s underwriting process. Many, if not all, title pawn companies will not check your credit but only want to know if you have previously filed for bankruptcy or perhaps a car title loan on which you later defaulted.
Q. How much money can you borrow via a title pawn loan?
A. The amount you can borrow with a title pawn will be based on the current resale value of your vehicle. Usually, most cars that are under ten years old, with low mileage, will help owners fetch a good amount of cash. The range for title pawn is anywhere from $2k on the low end all the way up to $10k for vehicles valued at $20k and above.
Your employment history and salary may also influence the amount you can borrow. Sure, you’re practically pawning your vehicle, but the lender still wants to be sure that you make enough each month to repay the loan when it is due.
Q. What is the legal status of my vehicle when I get an auto title or title pawn loan?
A. As mentioned in this article, title loans are secured loans; thus, your vehicle is used as security or collateral against the borrowed amount. However, you are still allowed to drive the vehicle and own it so long as you repay the loan on time. If you do not pay back the loan and continue driving it, the lender reserves the right to repo the vehicle, and at that point, it technically becomes theirs. That’s why vehicle owners are asked to surrender the title to their vehicles which are appended to the lien.
Lenders will generally sell a vehicle they repossessed to recoup their losses. That is also why your car needs to be of value that is equivalent to or more than the loan you want to take out.
Q. What is the best way to get the money I need fast when applying for a title pawn online?
A. When applying for a title pawn online, most lenders will promise to pay you the money within 20 minutes of being approved for it. The company mainly verifies that the title is authentic and that there are no outstanding payments on the vehicle. They will send you a receipt for the loan amount and make a cash deposit into your checking account.
The best thing about a car title loan is that there is little or little paperwork associated with the loan. There is also minimal back and forth, so as long as all your documents are in order or the information you provide is factual.
Some title pawn lenders that require documentation may only require proof of residency, proof of identification which can be a passport or your social security, and evidence that you have an active bank account. Online title loan companies work faster because they have far less overhead. But even then, it can take up to 24 hours before the money appears in your account since they don’t pay cash or send an electronic check.
Q. Should I apply for a title pawn online or offline?
A. Every one of these options has its own set of benefits, but both offer the same thing. When you apply online, you will get approved usually within a few minutes and notified accordingly. The entire process can be handled from anywhere, but your paperwork and information need to be in order.
You can also apply for a title pawn from a lender near you and still receive quick service, but it takes time to drive and compare rates. Plus, speaking with someone takes additional time. So, by the time you drive and reach the place, you will have completed the online form and possibly received an approval.
However, the minimal requirements across both types of lenders (online and offline) are the same. The lenders will still require a vehicle inspection before it is accepted as collateral.
The one benefit of applying offline is that you might be able to receive cash on the same day from their office instead of having to wait for the online lender to process it. So, if you need cash, and are willing to take the entire day out to get a title pawn, then doing it offline is probably fine. Everyone else will find applying for the title pawn online to be a lot more convenient.