A title pawn works similarly to a secured loan, but the lender secures the loan by holding title to your automobile. Before the loan can be made, the vehicle must be free of liens and fully paid off. This means it doesn’t protect your personal interests in the loan and you won’t qualify for a cash loan if there’s any reason why the pink slip isn’t fully paid off. If you fail to repay or default on the loan, the lender can take possession of the automobile.
What’s Required For A Title Pawn
Title loan companies and pawnshops will always demand automobile insurance, a surety bond or they can take possession of the automobile. When you cannot afford to repay the loan, the lien holder can take possession of the automobile because you have secured the loan. You will also need to prove your identity and give some information about your employment so the lender knows you can pay back the title pawn.
A title loan can give you the money you need quickly without violating state usury laws and without a high interest rate. Most title pawns are not secured, but in most states, if the vehicle is worth more than the loan it is secured with a surety bond. It is important to realize that title pawns can be risky.
How Does A Title Pawn Work & What To Expect
If you do not have items to post as collateral, or if there is no collateral to post, title pawns are generally not a safe solution. When you’re looking for a reasonable loan at lower than normal interest rates, you can typically reduce your vehicle’s value by 10 to 20 percent before they will make an approval.
There is an increase in the approval rate when you attain collateral. Your financial institution will want proof that they can trust you not to beat the terms of the loan, or that they will get their money back.
When you attempt to get a car title loan or title pawn with Southeast Title Loans, you may have to provide a form of identification, including a driver’s license, vehicle registration, a tampered will, or a copy of your paycheck. Other forms of identification include social security cards, security cards, discredit checks, a copy of settlement or mortgage documents, or a copy of your driver’s license. With credit or other financial issues, you may be asked to provide a copy of your application for new credit, a copy of your tax bill, a recent budget planning worksheet, and pay stubs.
At the time of approval of a title pawn loan, you will have to provide the title of your vehicle, the make and the model of your car, a brief history identifying the vehicle, and pertinent information about your title policy with your insurance company. Payment strategies are also going to be provided for items such as a title policy and a title search. There is a service charge for these services.
What Are The Drawbacks of A Title Pawn
It is very important to make yourself aware of what can happen in the event that you default on the loan. In the event you don’t do as agreed, the lender within the event can take possession of your vehicle. The lender has the inherent right to sell the title as well as hold any insurance policies on a vehicle. Although Title Loans often come with higher interest rates, many states have strict usury laws and there are other ways that the states can regulate the interest rate.
In this time of economic difficulty, it is very difficult for a person without any type of insurance to obtain a title pawn or online title loan for that matter. Many lenders are simply not willing to provide any type of lending service. Online companies can often provide you with the information you need about the types of loans they offer as well as the potential title loan fees. It is important to look around to get the best rate.
Loan Amounts & Interest Rates To Expect With A Title Pawn
If you are able to provide proof that you will be able to repay the loan, the loan amount could be as much as $2,500 or as little as $300. The APR and interest rate can sometimes be lower through Southeast Title Loans if you are trying to refinance or get better payoff terms. Most title loan refinance applications can be approved if payments are on time and if the vehicle is fully paid off. You may have lower or higher loan amounts depending upon your individual financial situation and your vehicle’s condition. Some companies will loan up to a certain percentage of the vehicle’s value, in this way getting you a loan for less than some.
In addition to the interest rate or APR, there will most likely be an annual fee that you will have to pay, a membership fee, a processing fee, etc. If you decide that a title pawn is right for you, we encourage you to read up on the subject before deciding what company offers the best deal.