An auto title loan is a short-term, high-interest loan for which a borrower uses their car title as collateral. To get the loan, you must be the free and clear owner of the car. Often, you have to pay the loan in less than 30 days in single-payment title loans. In particular, auto title installment loans allow the borrower to repay the loan amount in equal installments usually spread over 3-6 months.
Installment title loans company online allow the borrower to borrow cash against the equity existing in their cars. Often, lenders apply a portion of the entire payment to the principal loan amount, and this guarantees quick payoffs.
Title installment loan lenders are often referred to as “predatory loan lenders” because they usually target (or literally, prey on) borrowers who need the money in emergencies. They charge very high interests often up to 25 percent of the borrowed amount. In fact, the interest rates are so high that even for installment title loans, the entire payments tremendously exceed what the borrowers can afford. Again, in most cases, their rates are not annualized, and lenders usually don’t ask for proof of income. They also don’t focus on credit scores.
If a borrower is unable to repay the installment title loan, the lender can take ownership of their car, sell it and recoup the borrowed loan amount. In some states, even if the lender sells the car for a price more than what a borrower owes, they are not obliged to refund the difference. However, this is not the case in most states. In the event that a lender gets less than the amount owed after selling a vehicle, they can pursue the borrower for an additional payment.
To make repossession easier, most title loan lenders require that the borrower leaves them the car keys or install devices like remote immobilizers or GPS trackers.
How do I get an installment title loan?
Getting this kind of loan is not complicated. You only need to carry the car title and drive to a lender. Once there, the lender will assess the value of the vehicle then offer you an amount, usually a fraction of the car’s value. In most cases, borrowers can leave with the cash and the car in less than an hour, but the lender retains the title until you fully repay the loan.
How much can I get?
Depending on the value of your car, you can get as an installment title loan ranging from $100 to more than $10,000. However, the average loan amount is $1,000. Unlike lump-sum payment title loans which have an APR of 300 percent on average, installment title loans have an APR of 259 percent on average.
While the risk of having your car repossessed is higher with a single-payment title loan, installment title loans also pose quite some risk. A 2015 Pew Charitable Trusts report shows that while installment title loan borrowers have the chance to repay their outstanding amounts over some months, 31% of such borrowers default on the loans due to inability to repay. Also, 11 percent end up repossessed their vehicles.