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Originally Posted On: https://fastaction.ca/2022/11/23/online-auto-title-loans-top-questions-to-ask-before-applying-for-one/
Online auto title loans are increasingly becoming popular, with a quarter of borrowers using the loan for emergencies.
Others use them to pay bills, for business reasons, and 90% for personal use. Whatever your reasons for borrowing an auto title loan, its essential that you learn everything there is to know about it.
This car title loan guide highlights the top questions you should ask before applying for a loan.
What is a Car Title Loan?
A car title loan is a short-term loan that allows you to borrow up to a certain percentage of the cars value in exchange for the car as collateral. If you qualify, you can get the money from this loan before the end of the day.
Auto lenders usually finance vehicles that are paid off. However, a few lend on cars with pending loans, in which case the loan balance is called a registration loan. The lender could repossess your car if you don’t pay the loan on time.
Youll need to provide proof of ownership, your license, and car details when applying for the loan. If approved, you’ll need to hand over the title. The average repayment term is 15-30 days, and you’re required to make payments on the loan and any applicable interest and fees.
How Much Can You Borrow?
The amount you can borrow on a car title loan depends on its value. Lenders usually provide 25% to 50%, depending on the appraisal value and the maximum amount the lender will lend.
Your lender will likely use Canadian Black Book to appraise your car and provide an estimated value. However, different lenders will provide varying quotes based on the condition of the car, so consider shopping around.
What Documents Do You Need?
You need to provide proof of identity and vehicle ownership when applying for a car title loan. Some of the documents the lender will need include the following:
- Government-issued ID
- Vehicle registration
- Car title
- Evidence of finances
- Proof of address
- Proof of insurance
Some lenders may require photos when applying online to gauge the condition of your car.
How Much Does It Cost?
Interest rates on car title loans can be as high as 60% depending on the terms of your contract. Other additional fees you can expect include documentation, processing, and loan origination.
Purchasing a vehicle roadside assistance package may also increase the cost of a title loan. Other factors that may affect the cost of an online auto title loan include loan amount and term. That said, you can submit a legal complaint if a lender charges you more than the legal limit of 60%.
Can I Apply for a Car Title Loan with Bad Credit?
It depends on the lender you choose. In most cases, your credit score doesn’t play a role in the approval process because you put the car up as collateral.
They’ll repossess the car if you default on the loan. Since the approved amount is 25%-50% of the appraised value, they can easily recover their money after auctioning the vehicle.
What is the Best Car Title Loan?
There are several factors you have to consider before applying for a loan to ensure you get the best deal. Here are a few car title loan tips to guide you and help avoid any pitfalls.
Know the Payment Options Available
Most lenders accept payment from your paycheck or by direct payment. You also need to know how long your loan will last. Like most types of debt, a longer repayment term translates to lower payments and finance charges.
Understand the Online Approval Process
Some auto title loan lenders have an application process that takes place entirely online. Some lenders require further verification via phone or a visual inspection of the car. The process can take anywhere between less than 20 minutes to a few hours.
Ensure the Lender Has a License
Canadian regulations demand that online title lenders be registered. Because of the popularity of this type of loan, there are many scammers out there looking to swindle hard-working people. Ensure you double-check your lenders eligibility before filling out an application.
Ensure You Get to Keep Driving Your Car
Most lenders let you keep driving your car once you access the loan. However, a few lenders require your vehicle to be impounded with them until you repay the loan. Others require that you put a tracking device on it to monitor your every move.
What Happens If You Cant Pay the Loan?
If you cant repay a car title loan, along with all of the fees and interest, the lender could allow you to roll it into a new loan. This option attracts more fees and interest onto the amount you’re rolling over.
Example: Lets say you’re unable to repay a $500 loan along with a $125 fee at the end of a 30-day term. The lender allows you to roll over the $500 balance into a new loan with a 25% fee and pay the $125 fee. If you pay the new loan off within 30 days, the $500 you borrowed will cost $250.
The lender could also repossess your car if you cant repay the loan.
What Happens If I Get into an Accident?
Car accidents are always unexpected and can throw you into financial instability. However, car title loan borrowers must continue to make payments. Failure to do so can result in defaulting the loan and vehicle repossession.
But don’t worry, we prefer helping our customers get things squared away. Stay in contact with the Fast Action team and keep us in the loop.
Apply for Online Auto Title Loans in Canada? Fast Action Can Help!
If you like the idea of applying for online auto title loans, Fast Action is here to help. We’ve providing car title loans for over 25 years, and are honored to help you in your time of need. All you need to do is fill out an application form for same-day approval.
