Having your own automobile helps a lot in our daily living. Yet circumstances such as if there is an emergency in the family or you are strapped for cash does happen. One way to get funds quickly is through a cash loan. Automobile title loan is one of those you are able to take advantage of.

You can avail of this loan even without the need to cash advance your credit card. Not when it comes with a hefty interest and charges. You can still utilize the available credit which you might want or otherwise need to transact for other necessities. Also, you do not have to go through the complicated loan process in a bank. Title loans are easily available if the car is fully or almost paid and you have a clear title.

Who is eligible for Automobile Title Loan?

The eligibility criteria for automobile title loans are given to anybody for long as they own a vehicle. For those with history of bad records about previous loan processes, you need not to worry since it does not count. Moreover, the loan amount is determined by the existing value of the vehicle only.

Other criteria of eligibility are mentioned below:

1. The age of applicant should be 18 years as per US lenders criteria.
2. He should be a US citizen.
3. The social security number is necessary to get the approval.
4. The applicant should have a job with a salary account in US bank.
5. While poor credit score is also acceptable, he should not be bankrupt.

Typically auto title loans does not take too much time for processing. All you need to do is just walk into a loan agency or do it easily by completing out the form through the internet and the loan application will be processed within 24 to 48 hours. Common among title loans, lenders loan up to 50 percent of the value of the vehicle, which takes care of any depreciation in the price of the car over the repayment period.

Bear in mind that there are few things to remember after qualifying and granted a car title loan. This type of loan can be a very high financial risk for the borrowers, especially those who borrow more money than they can actually afford to pay. Remember, a single missed payment on this title loan could result in your car being repossessed at anytime. If your car is seized, any additional funds obtained from the selling of the vehicle is also retained by the lender.

With this, qualifying for a auto title loan is a real blessing in times of great need and it assures the help you need for specially when faced with a major financial crunch.

People avail of loans on a daily basis depending on the need or purpose for that particular moment. There are various types of loans to choose from. Here, the focus will be on cash loans. Automobile title loans vs payday loans to be more specific.

But what is the difference between these two? When is one more beneficial than the other? Should both be patronized or is one almost always the better choice? Let’s begin with how they are different.

Auto title loans vs payday loans: The former is a loan given to car owners based on how much their automobile is worth. This particular type of loan is only given considering that you own a car which is debt-free. Before you can take advantage of this, make sure that you have no other obligations currently placed on your vehicle. Depending on who releases the loan, he has the option of whether the amount you receive is based on the wholesale, retail, or private sale values.

Payday loans on the other hand are loans given to any person based on the amount of his or her future salaries. These involve payouts of a much lower value and have due dates reflecting the loan holder’s upcoming paycheck.

The next aspects to consider are the payment terms and company licensure. It is vital for a loan company to carry an official business license from the government. It is better to be safe than sorry later on. With regard to payment terms, loan companies usually have payment schedules that follow a weekly, bi-weekly, or monthly scheme. Others offer even longer and flexible terms of payment.

Between auto title loans vs payday loans, what is better is what generally fits your purpose, time of need, and of course your ability to pay back the amount that you borrowed. One can be better than the other but might not be beneficial for you and vice versa.

Loans can be considered as products that make our lives easier or more convenient. When you consider applying for one, you have to make sure that you are not getting yourself into a tight situation where you can not commit to repaying what you owe. It is also important that you be responsible enough not to let yourself fall into the cycle where the inability to pay will lead you to borrow yet again and so on.

If you own an automobile – paid in full with no liens or current financing, automobile title loans can be a source of funds at a time when you badly need cash. As long as you are entitled to your auto (see eligibility criteria), this kind of short-term loan can work wonder for you or those on the lower end of credit score scale.

No credit check is run as the only consideration for the loan is the value and condition of the vehicle. In this case, the title of your auto is kept as collateral for the loan.

Often you’re required to provide a spare set of keys when the loan is granted. Of course, you are still the rightful owner of the car.

How Auto Title Loans Work

Automobile title loans are designed for short-term financial relief and carry higher interest rate than other sources of credit. The loan is secured by the title to the vehicle. The maximum amount of the loan is determined by the collateral.

Typical lenders will offer no higher than 30 – 50% of the actual appraised of resale value of the car, meaning that most auto title loans are “oversecured.” The repayment dues are made within 14 days to a month of the loan on being issued where the borrower has to repay the entire amount of the loan plus fees in one lump sum (a “balloon payment”).

Bear in mind that if you are unable to pay off the loan amount, there is a provision of rolling over the loan repayment for another payment period where it carries a large interest payment against the loan from defaulting, or the lender will come and take the car, sell it, and keep the money from the sale.

Since annual percentage rates for auto title loans are marginally very high – depending on the state where the lender is located, interest rates typically range from 36% to as high as 651.79% (APR) source: Wiki, rolling over the loan for a few more days carries the fact that you could end up paying a whole lot more the amount of the loan in interest and fees alone.

For lenders title loans are a very low financial risk, typically the loan amount is far less than the value of the automobile. On the other hand, it can be a very high financial risk for the borrowers, especially those who borrow more money than they can actually afford to pay.

Remember, a single missed payment on this title loan could result in your car being repossessed at anytime. If your car is seized, any additional funds obtained from the selling of the vehicle is also retained by the lender.

Depending on your circumstances, auto title loan is a convenience way to get hold of cash fast. Just the only thing you need is to pay back on time. Otherwise, when you default on the loan, the car would be forfeited and sold to resettle the balance of the loan. If the sold value of the car is less than what it’s owed, you’re still obligated to pay the difference.

For this reason alone, it’s important that you weigh the pros and cons and decide if automobile title loan is really the best available option. If you decide to complete the title loan, be cautious. Read the contract in detail before signing on the dotted line and completing the process.