Are you in need of a title loan, but you aren’t sure how they work or value your vehicle? Do you find yourself searching online for “how to determine the title loan value of my car”? If you need quick financial relief due to an unforeseen circumstance, a title loan may be able to help you in a pinch.
These loans use the equity in your vehicle to provide you with a quick loan. Before you can apply for this loan, you may want to determine the title loan value of your car. In this brief title loan guide, we will cover how to assess the value of your car and who you can reach out to for the best title loan rates.
What Is a Title Loan?
A title loan is a short-term loan that uses your vehicle as collateral in exchange for a lump sum of money. If you don’t have excellent credit and need a loan fast, you may have a better chance of pulling a loan out of the equity of your vehicle.
Most title loan lenders don’t focus too much on your credit and are more concerned with the value of your vehicle. This is because if you default on your loan, they can take possession of your car. To recoup their loss, they will sell your vehicle.
Most clients have thirty days to three years to pay off their loans. Each lender has its own ways of setting its repayment timelines, so be sure to ask your lender how long you have before you take the loan.
How Do Title Loans Work?
You can apply for a title loan through a lender that offers them as long as you outright own your vehicle. Most title loan lenders won’t authorize title loans if you still owe on the car, but a few make that exception. Before you apply for the loan, you should have a few things on hand.
What to bring to the lender for approval:
- Proof of ownership of the vehicle (vehicle title)
- Your driver’s license
- Proof of residency
- Proof of income
If the lender approves your loan, you will have to hand over your vehicle’s title to the lender. Each lender has the right to set their own loan terms, interest rate, and repayment schedule.
You must make monthly payments in addition to any fees or interest. In general, most lenders charge a monthly fee of about 25% of the loan.
Determining the Equity in Your Vehicle
As mentioned earlier, you must either have a clear and free title or a good amount of equity in your vehicle to take a loan. A vehicle can have positive or negative equity.
The higher the equity of your vehicle, the more it is worth. When you apply for your loan, you will be able to get more out of your vehicle title loan with higher equity.
Positive Equity
Your vehicle has positive equity when you have more money than you owe. If you have a valuable car and you are close to paying off the loan, you most likely have positive equity. For example, if your vehicle is worth $10,000 and you only owe $1,000 left, you have $9,000 in equity.
Negative Equity
You have negative equity when you owe more than what you’re vehicle is worth. If you owe a lot of money on your vehicle and it does not have a high resale value, you have negative equity.
For example, if you own a car worth $3,000 but you owe $5,000 on your loan, you have negative equity. If you were to sell your vehicle and it only was worth $3,000, you would have to pay off that remaining balance with your lender.
How to Determine the Title Loan Value of My Car
So how do I determine the title loan value of my car? You can determine the value of your car by using Kelley Blue Book, or you can hire someone to appraise your vehicle. When using Kelly Blue Book, you will simply enter information about the vehicle’s year, make, model, and condition of your vehicle.
So if you have a newer vehicle in better condition, you may receive more than someone with the exact vehicle with an older year and worse shape. It is important to note that Kelly Blue Book is only an online tool that can give you a general idea of how much your car is worth. When you get your vehicle appraised by a title loan company, they may have a different figure.
What Do You Owe on Your Vehicle?
After you have a general idea of the value of your vehicle, you will need to then deduct how much you owe on your auto loan if you don’t outright own your car. For example, if you own a 2012 Camry in good condition with a trade-in value of $5,000 but still owe $2,000, you really only have a value of about $3,000. If you don’t owe anything on your vehicle, you won’t have to do this step.
Title Loan Value of My Car
Most lenders offer loans between 25% to approximately 50% of your vehicle’s value. It is also important to note that they may place a tracking device on your vehicle to prevent anyone from trying to hide the car. In the event that you don’t pay your loan, they have the right to take your vehicle as collateral.
If your vehicle is valued to be about $5,000, you can receive up to $2,500 of your car value. Make sure to ask the lender what percentage they are willing to give you.
Advantages of Title Loans
There are several different pros and cons that come with getting a title loan. A significant advantage of getting a title loan is the fact that most lenders don’t check your credit. They are more concerned with the value of your vehicle and your ability to repay the loan.
Quick Approval and Access to Funds
Since there is no need for a credit check, the approval process is relatively quick. Once the lender prescreens you and advises you that they can offer you a loan, you will just need to bring them your vehicle to inspect.
They will take a few photos, place a tracker, and take possession of your vehicle title. Title loan companies do not have money at their location. Instead, they will wire you or direct deposit the money into your account once you receive your approval.
Disadvantages of a Title Loan
Although there are several outstanding advantages of having the option to get a title loan, there are a few disadvantages you should be aware of. For example, title loans are a potential debt trap if you aren’t good with your finances.
If you can’t afford to pay back the loan, you may want to look into other options. Some lenders are willing to work with you if you are late or behind, but be sure that you communicate with them early so you don’t lose your vehicle.
Shorter Repayment Terms
These loans typically have a repayment window of about thirty days to at most three years. Most lenders only give you less than a year or up to a year to pay off the loan, whereas others can give you an extended timeline.
If you aren’t able to repay the loan timely, you risk losing your vehicle. Even after you lose your car, you may still be stuck with a remaining balance that will go on your credit.
High-Interest Rates and Fees
Because these loans are convenient and easy to get, lenders have to make sure they mitigate their risk. To make up for it, they have to charge higher fees. If your repayment term is only about two months and you have an APR well over 200%, you will end up paying more than what you borrowed.
How to Get a Title Loan
To get a title loan, you must first find a reputable lender near you. A good majority of these lenders are online, and they can authorize the loan fairly quickly. If you go with an online company, they will send you to one of their locations to take photos, add a tracker, and take possession of your title.
Wait for a Response
Once you send in your information to the lender, they will review your information to see if you are an ideal candidate. If you are, they will call you and discuss your options.
If you agree to their terms, you will have to go to their location for them to meet with you in person. They have to verify your information in person to ensure there are no fraudulent activities going on. Some lenders have the ability to send a representative to your house if that works better for you.
Accept Your Offer
If everything looks good and you have all the correct documents, you can expect to receive your funds in a timely manner. Some clients receive their money the same day, whereas others won’t have access to those funds for about one to three business days.
Your bank may also hold the funds for an extra couple of days as a security measure. Be sure to call your bank ahead of time to let them know about the loan.
Title Loan Alternatives
There are several different options available to you if you don’t wish to go through with a title loan. For example, you can reach out to another lender for a payday loan. These loans are smaller in value, though, and a lot of payday lenders practice unfair lending practices.
Their predatory tactics sometimes keep people in debt, forcing them to struggle to keep up with making their payments. They may have longer repayment terms, but most payday loans are small in value, and not all lenders give you more time to repay the loan.
Credit Cards
When you apply for a credit card and receive an approval, you will have access to a specific credit limit. You can use this money as needed, but you are expected to pay down some or all of your balance within thirty days.
Any unpaid balances you carry will accrue interest, and you will have to pay that down in addition to the principal amount of the credit card. Credit cards are an excellent alternative, but if you need a more significant sum of money or cash on hand, you may not be able to get the amount you need soon.
Friends and Family
If you can, ask your friends and family to lend you a hand so that you won’t have to obtain a loan. Your loved ones aren’t likely to impose intense interest rates the same way personal loans or other loans do.
Depending on your relationship with your family, you may be able to work out a more manageable repayment plan than you would getting a loan from a lender.
Help Me Determine the Title Loan Value of My Car
Now that you know how to find the value of your vehicle, you can stop searching online for “how to determine the title loan value of my car”! There are excellent online tools like Kelly Blue Book that can give you a general estimate of the value of your vehicle, but it is essential to keep in mind that your lender may come up with a different amount.
Even if you have a lot of equity in your vehicle, you can only take a percentage of the loan. Contact us if you are ready to find out how much you can get for your vehicle title. We are here to answer any questions you have about the process.