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Requirements and Procedures When Applying For A Car Title Loan

Car title loans work in a way that the borrower shows their car to the lender who inspects the condition of the car for verification and gives a loan according to the amount the given car qualifies for. Prior to issuing the loan, the lender keeps the title to the vehicle as a collateral then proceeds with lending out money. In order to access a car title loan, the borrower must own a car and must have the original vehicle title showing sole ownership, a government-issued identification card, a utility bill, current vehicle registration, and proof of insurance. Some lenders might require a duplicate of car keys and the installation of a GPS system in the car.

Reasons Why Car Title Loans Are So Convenient

Online lending companies have made access to loans easy and convenient. You simply apply via their app, wait for an approval. As far as car title loan requirements go, you will be needed to provide basic documents such as a copy of ID and proof of income and finally collect the loan you requested. Another reason why these loans are so convenient is that they do not require credit information from the customer.
 Past credit records of the borrower with other loaning institutions such as banks, apps, or finance groups are not necessary in these cases.  Additionally, title loans companies do not bother the customer with asks such as providing their sources of income, unlike for instance a  bank which would require a source of finance, say an occupation,  to determine one’s capability to repay the loan. This fact is to the advantage of people who desperately need to access fast cash but they can’t due to their credits with other creditors.

Car Valuation

More often newer cars have higher chances of fetching high loan amounts compared to old ones as they are in good conditions. Nevertheless, an old car sometimes can be of high valuation based on the make and type of the car. Old and well-maintained vintage cars put their owners in a  better position of accessing the loan amount of their desire. Before applying for a car title loan, it is important to get a car valuation report. This report will tell you the details of the car including its registration date, average mileage based on its age and the color.  It will also include an original market value of the car, prices for selling privately, trade-in prices and forecourt prices in the outline.

The Importance Of A Car Valuation Report

It is very important to be well informed about the real value of your classic car. Proper knowledge on the actual value of your car enables you to make frontline decisions when it comes to the various financial opportunities available. It will also help you avoid instances where you are given less money compared to your car’s market value. Car valuation ensures you get a good deal for your classic automobile as it eliminates instances of undervaluation and overvaluation of the given car. Undervaluation leads to losses whereas overvaluation will lead to delay in selling or accessing loans.
Fees and Rates

The car title loan limit is generally 25% to 50% of the cash value of the car in question. The average loan rate in figures is Ksh 100,000, although the figure can vary from one company to another. There are some who are more than willing to offer Ksh 1,000,000 and above. Car title loans are usually short-term loans for at most 30 days. There are two kinds of car title loans; single payment and instalment payment loans.

 Single payment car title loans require borrowers to repay the amount given in one lump sum and have an average Annual Percentage Rate (APR) of 300%. Instalment rate payments are loans where the loan is paid with a 25% monthly interest rate fee. For instance, if you borrow a loan of Ksh 50,000,  you will pay a total of Ksh 62,500, inclusive of the 25% interest charged which will be Ksh 12,500 and the principal rate.

When there are delays, a rollover is issued. Rolling over is given to a customer who fails to pay within 30 days time. This means a 30-day new loan term is added to the customer for a given duration of time. If the loan was to be paid with 25% interest normally,  an addition of 25% of the money initially borrowed is added every month that passes.  This accumulation can reach 300% APR if the payment period is dragged to 12 months.

Things To Watch Out For When Applying For A Car Title Loan

The customer should review the terms of the loan just to be in the know. The loan’s terms and conditions should be given by the lender. These terms should indicate finance charges and annual Percentage rate. APR is usually based on several things such as the amount you borrow, the interest rates, credit costs and the length of the loan. Fees in car title loan may include processing fees, document fees, late fees, loan origination fees, title charges, and lien fees. As a customer, be aware of add-ons that may end up increasing the cost of the loan.

An example of these add-ons can be a vehicle roadside service plan. The customer has various payment options they can use to clear their debt with the car title company. Options include clearing in person through the online system or using an automated repayment plan. In plans where payment is automated, the lender takes regular cuts directly from the customer’s debit card or bank account, under the authorization of the customer. This option is governed by various policies as banks are involved.                                                                                        
Consequences Resulting From Failure To Pay Back The Loan

Failure to pay car title loans back leads to the lender getting possession of your automobile which was used as the security. Repossession of the vehicle works in a way that the car title company gets to sell the vehicle to return the money being owed when the borrower fails to pay the needed amount.  

It is easier for the company to track the vehicle using Global Positioning Systems (GPS)  which might be attached to the vehicle by the company so as to monitor its location. An estimate of 1 out of 5 people which is 20% of title customers loses their car through repossession.  Even more interesting is the fact that, according to consumer financial protection bureau, CFPB, 80% of title loan borrowers end up re-borrowing immediately after paying their loans.    

Car title loans are very helpful as they cover their customers’ financial emergencies wherever and whenever they need it. As these loans do not consider credit history and do not look at the age of the car but its value, they are ideal even for vintage car owners. However, customers should plan their finances prior to avoid losing their cars through repossession by the car title loan company. Proper information about trusted car title companies and familiarity with a company’s terms and policies should also be keenly considered, in order to enjoy these loans. 

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