When life’s little emergencies pop up, they can cost a pretty penny. And if cash is short, then it can be certainly tough to come up with those pennies. If other options such as savings accounts, borrowing money from friends or low APR personal loans have been exhausted, then one might need to turn to an online auto title loan to get cash quickly.
What is an Online Auto Title Loan?
An online auto title loan is a loan given from a lender to a borrower where the borrower uses the automobile as the collateral to secure the loan. Once the loan is paid back in full, including interest and fees, then the auto title is returned to the borrower and the transaction is complete.
Requirements for an Online Auto Title Loan
Because the auto is acting as a piece of security for the loan, the automobile must be paid in full. That is to say no other debtor can place a claim on that loan. Otherwise their claim would take priority over the auto title loan company.
Some companies will bend these rules if there is enough equity in the vehicle that they could sell it for a profit in the case of default. The profit would have to be great enough to pay off the first note and make a reasonable amount of money for the auto title loan company. An example would be a car valued at $50,000 with only a $5,000 loan against it.
Term of An Online Auto Title Loan
An online auto title loan is meant to be a short term loan. The term of these loans are usually between two weeks and a month. At the end of that period there is usually a clause which allows the loan to renew if the note is not paid back in full. However, after the note has been rolled over several times, there will come a point in the contract where the auto title loan company must receive their money or they will keep the car.
Interest on an Online Auto Title Loan
The interest rates on these loans are often quite high. They may advertise a rate of 25 percent, however that 25 percent is for the term of the loan, which is usually a couple of weeks to a month. At the end of that term when the loan renews, another 25 percent will be charged. As the loan continues to get rolled over, the interest accrues.