In these challenging economic conditions, title loans are often used by people who are in need but do not have access to traditional credit markets because they have poor credit scores or limited credit history. Title loans are secured against the vehicle owned by the borrower. For the loan duration, which is usually 6 to 18 months, with a high-interest rate given the borrower’s riskiness, the borrower allows a lender to place a lien on their car title. The finance lender holds the hard copy of their vehicle title or a second set of keys to your car. Failure to pay off an online title loan by the agreed date means losing your car. That’s why it’s so important to pay off a title loan or to refinance it if you get to a point where the monthly payment or APR is more than you can afford. One way to refinance such a loan is with a lender buyout.
Title lenders do not typically look at the borrower’s credit history, as a low FICO score would lead to a quick denial for most refinances. They understand that the borrower does not have the best credit history but needs credit. To compensate for the risk, they are taking; the browser agrees to pay a high-interest rate on the loan. This is because these loans have a high risk of default for the lender. The size of the loan is determined by the value and condition of the borrower’s vehicle. The borrower will not be able to get a loan against the full value of the loan but will instead get a sizable percentage of the car’s value. For instance, a title lender may grant you a loan worth as much as half of the value of your vehicle. Many lenders will only give you a loan if you own your vehicle outright.
Loan Amounts And Rates For A Title Loan Refinance
A title loan lender in Miami confirmed that a title loan could usually be granted within 15 minutes for amounts between $500 and $2,500. Higher amounts take a little bit more time but can still be processed faster than with traditional lenders. To secure a title loan, you approach a title loan lender online or in person. You must provide the lender with proof of identification, such as a driver’s license or government-issued ID. You will also have to provide proof of income, residency, car registration, a lien-free car title in the borrower’s name, references, and car insurance. However, many states do not require proof of car insurance. The lenders will use Kelley Blue Book to determine the car’s resale value.
The interest rate charged varies from state to state, ranging from 36% to well past 100%. The payment schedules also vary, but the bare minimum is that the borrower has to pay the interest by the predetermined due date. The final term period of the loan is when the outstanding amount must be paid. If the borrower cannot repay the loan by that time, the balance can be rolled over, and a new title loan can be taken.
How To Get A Lender Buyout For Your Title Loan
You can ask another lender to pay your previous lender the amount you still owe, releasing you from that obligation. This is what is known as a title loan buyout. A loan buyout can be great if you’re already behind on the monthly payments or can no longer afford the due amount. There are government regulations around how often the balance can be rolled over, to protect the borrower from being permanently in debt.
The bottom line; always stays in contact with your lender to see if they’re open to a loan buyout or if they can refinance the current payment terms. There’s no risk in asking to lower the rates, and you can save substantial money in the long run!