There could come a time when a person needs a loan to pay a debt. They may be facing a difficult situation and need money quickly to deal with an emergency situation and more. It's possible for a person in this situation to use their car to obtain such a loan.
These are known as car title loans. An individual can get a loan based on the value of their vehicle. They will be required to use their vehicle as collateral. If the loan is not paid back, the lender can repossess the borrower’s vehicle.
History of Title Loans
During the early 1990s, there was a need to provide loans to people who had poor credit. These were people who were working hard to repair their credit. Traditional lenders would charge them extremely high fees or simply deny their loan applications.
According to a study by the Consumer Federation of America, this was a new market waiting for the right loan product. Designing a loan based on a person's vehicle as collateral was tried in a few states. The popularity of it caused other states like Texas to make this type of loan available to their consumers.
Auto equity loans in Texas is something considered a low-value, short term loans based taking equity from a person’s vehicle. It's important a person know the fair market value of their vehicle. A vehicle will depreciate in value faster than a home or other type of collateral. As a vehicle ages, the equity associated with it will decrease.
When a person gets an auto equity loan, they will be required to provide proof of having collision and comprehensive auto insurance. The lender must be certain the person applying for the loan does have sufficient insurance coverage during the term of the loan. This is because the lender will control the title. This is a situation where a person owns the title to their vehicle.
They may have dropped the collision and comprehensive coverage on their vehicle and only carry liability insurance. A lender may ask a potential borrower to obtain more insurance or add other types of coverage.
If a potential borrower does not have sufficient insurance coverage, it is possible a lender will recommend a borrower purchase a “debt cancellation addendum.” This is also known as “credit Insurance.” This will pay a person's loan payments in the event they're in an accident. It is not designed to cover the cost of repairing a borrower's vehicle.
Auto equity loans in Texas are preferred in certain situations. This type of loan is designed to make it possible for a borrower to obtain the amount of money they need very fast. It is possible to have this type of loan processed within two days or less.
This is a loan with a rather simple process. It may only require a lender seeing a person's vehicle and making certain it is valued at the amount the owner wants to borrow. This type of loan is able to be obtained by anyone with clear title to a vehicle.
It requires no background or credit checks. This is because it is a secured loan. Its amount is based on the value of a person's vehicle. This type of loan has very high Texas Approval rates. Plus we don't check your credit when you're applying for a title loan with us.
Bad Credit or No Credit
When a person has bad credit or no credit, their options for borrowing money is limited. The benefit to an auto equity loan is that collateral is provided.
A person's past credit mistakes, as well as not establishing a credit history aren’t important. During the approval process for title loans in Texas, a person's credit history is never checked. If a person is identified as a possible bad credit risk, they could be paying a higher percentage rate on their loan.
It is possible for a person to obtain a car title loan online. Each site has an application that is unique to their company. All lenders have a similar process, and the information they need is usually the same.
An individual must be ready to provide some standard information about themselves that would be required with any type of loan application. A person will also be required to provide certain information concerning their vehicle.
This could be make, model, color as well as VIN, the mileage on the vehicle and their insurance information. A person's insurance information is considered very important.
A completed loan form must be submitted according to a company's requirements. The next step is to provide the vehicle's title. The title of the vehicle must be clear and not a salvage title.
The vehicle cannot have any liens attached to it. A person will only be able to obtain an auto equity loan with a vehicle that is paid off.
Once all this information, and the forms are submitted, a person just has to wait for their approval. Depending on a company's process, a person may get a call or email explaining the next step in their loan process.
It's possible the entire transaction can take place online. Some companies require a person to come to their office to provide the title and a set of keys.
The Center for Responsible Lending estimates the volume of auto equity loans in the United States to be approximately two million loans annually. Over $1.5 billion in funds is loaned to consumers, and more than $4 billion in loan fees are paid.
The popularity of auto title loans is increasing in Texas. Statistics provided by the Texas Fair Lending Alliance shows these loans went from approximately 1,300 to 2,500 in 2015.
They have steadily increased since then. Another thing that makes zero percent Texas title loans attractive is the borrower being able to maintain control of their vehicle. They can continue to drive it. They will have no change in the ability to use their vehicle during the time the loan is being repaid.
There are advocacy groups who criticize the title loan industry. They consider them a form of financial entrapment for lower-income individuals. What these groups fail to realize is how these loans have helped many individuals facing a hardship or some type of emergency.
They are able to provide quick funds in situations where traditional lenders would not be a viable option like with San Antonio title loans. Auto equity loans in Texas are able to be a real benefit to people who need short-term financial relief and can pay the loan off before the interest rates begin to compound similar to Texas car title loans.
Small-credit-loans that use collateral like auto equity loans have a bad reputation with some consumer advocate groups. There are even politicians who will use these types of loans as a reason to increase the amount of government regulation covering industries that provide them.
What most of them fail to realize this how this is an effective way to provide Texas title loans for low income individuals desperate for money. These could be people who would be turned down by a traditional lender.
They may not be able to wait the necessary time required for a regular loan. An auto equity loan is often an excellent and quick way to help good people like you that are facing a bad situation.