If you are looking for an easy way to turn your car into cash, you may be interested in getting a title loan. Title loans don't require you to have good credit or to use anything other than your car's title as collateral. There is generally no need for a cosigner, and you can keep possession of the vehicle during the repayment period. What else should you know about how you can turn your car into money with title loans?
An Overview of Texas Title Loan Requirements
Texas title loan interest rates are capped at 10 percent under state law. However, there is no limit to the fees that a lender may charge. Therefore, many lenders will arrange for a third-party to actually provide and service the loan with an interest rate of 10 percent or less.
However, the loan company will charge fees to act as the broker between the borrower and the company servicing the loan. This may mean that a borrower pays roughly the same amount whether the costs of the loan are labeled as fees or interest charges.
To get car title loans Texas, you must have a valid drivers license or some other form of valid state identification. You will also need to have a blank check from the financial institution that handles your checking account. It may also be necessary to show proof of income or some ability to repay the loan in a timely manner.
Local Laws May Result in Additional Restrictions
If you live in a big city such as San Antonio or Dallas, you may be restricted to the amount that you can borrow from a title lender. In most cases, you won't be able to borrow more than 70 percent of the car's value. It is also possible that the loan amount cannot be more than 3 percent of your yearly income. This means that if you make $25,000 a year, you won't be able to borrow more than $750 no matter how much your car is worth.
The Process of Getting a Title Loan in Texas
To get a title loan, you may need to have your car inspected by the lender to get an accurate appraisal of its value. However, some lenders may allow you to show pictures of the vehicle and trust that you are being honest about its condition. If you need the money quickly, it may be possible to accept less than what the car is worth in exchange for guaranteed loan approval within minutes or hours.
How Long Do You Have to Repay a Title Loan?
Typically, you will have two to four weeks to repay your loan. However, if your loan is for an amount greater than $1,000, you may have several weeks or months to repay it. It is important to ask your lender ahead of time what the repayment schedule will be and what options you may have if you need more time to pay.
What Happens If the Loan Isn't Repaid?
If you fail to repay a title loan from any title loan locations in Texas, state law gives the lender the right to repossess your vehicle. Repossession may take place even if you haven't missed a payment assuming that it is more than seven days past due. In many cases, lenders do not need to give any advance warning or any other indication that the car will be repossessed.
Therefore, it is critical that you contact your lender as soon as possible if your think that you won't be able to make your payment on the day that it is due. To prevent late payments, it may be a good idea to have them taken out of your bank account automatically each month.
Turn Your Car Into Money With Title Loans Multiple Times
Assuming that the car holds its value well, it may be possible to turn your car into cash more than once while you own it. This is because you get to keep the car and the title as long as you keep up with your payments. Once a loan is paid off, you have 100 percent ownership in that vehicle while retaining 100 percent of its equity. At that time, feel free to apply for another loan that could be worth as much as 60 percent or more of your car's value.
Make Sure That the Lender Is Licensed
Before you turn your car into money with title loans, make sure that you are borrowing from a licensed company. While state law requires that all title lenders are licensed, you should still do your research before borrowing money from any company. You will want to talk with other borrowers, look for any complaints from the government or other watchdog groups and look over the details of any loan before your agree to it.
While you may feel like you don't have time to shop for the best title loan, it will be in your best interest to do so. This is because getting a lower interest rate or paying less in fees will make it easier to repay the loan without having to flip it or take out another loan to pay it off.
If you are in need of cash fast, you may find what you are looking for with a title loan. Loan applications may be accepted and approved online within minutes, and it may be possible to get your money without the need for anyone to inspect your car. Once your application is approved, the money could be in your account within one business day, which is three to five days faster than most traditional lenders.
How to Avoid Title Loan Repossession
Some people are afraid of car title loans because they think they'll automatically lose their car if they get one. The truth is, you'll only lose your vehicle if you go into default, and you won't go into default if you take on a loan that you know you can afford. Never borrow more than you need or more than you can pay back.
Here are the four best ways to avoid a car title loan repossession.
- Borrow from a reputable lender. Don't be fooled by lenders who promise nonsense, like a title loan without vehicle inspection. Any good lender will inspect your vehicle so they can offer you a solid, reasonable loan amount.
- Borrow only what you can afford to pay back. You may be surprised by how much you can borrow, since the loan amount is based on what your car is worth. But don't let that tempt you to take more than you can reasonably pay back.
- Understand your repayment plans. Ask questions. Don't sign until you fully understand the terms of your loan. If you feel uncomfortable, back out.
- Stay in touch. If you followed all the advice above and you still find yourself unable to make a payment, call your lender. Chances are, they'll be happy to work out an arrangement.