When you find yourself in a situation where borrowing money is the only way to stay afloat, you have a lot of tough decisions ahead of you. First, you must decide how you are going to borrow money. Car title loans have several advantages over other types of loans. These include:
For many people, an auto title loan makes the most sense for a variety of circumstances, especially those in which a small loan couldn’t cover the need. But once you’ve decided that you’re going to go with an auto title lender, you must now decide which lender is the best for you.
The Search Begins
When you first look for an auto title lender, you might be tempted to go with whichever lender is closest or most convenient. But when it comes to something as important as the title of your car, you should do a little more research first. There are many things that could make one auto title lender better than another, and if you have to drive just a little further to an area around you to find the best lender, you can at least rest easy knowing that you’ve chosen a trustworthy company to hold on to your title.
Here are some criteria to consider when shopping for the best auto title lender in and around your area:
Licensed and Legal
Any time you are dealing with an industry like lending, you need to be sure that the company is properly licensed in the state of California. In the state of California, for example, auto title lenders must lend each borrower at least $2,500 or more, to avoid the cap on small loans. The state of California places a maximum fee limit of no more than 30% of the total loan, although they do not limit the amount of time your loan terms can be.
In order to discover if a lender you are considering is properly licensed and following the laws, you can check their website for information, or search the online directory for business licenses. The license to do business must be displayed in their office, so your final step could be visiting the office to see the license in person.
Stability and Ratings
With something as important as finances, it’s important to be sure that you are dealing with a company that is stable, and that has a long history of offering satisfactory service to previous clients. If your choice is between two companies, choose the lender who has been in business for longer, or whose online reviews are more positive. The only time you may want to choose a younger lender is if they are offering better rates in order to establish their business, or if they have much better reviews than the more established title lender.
When you are searching for a great title lender in or around your area, you can also consider the turnover of their employees. If you’ve noticed a different receptionist being trained every time you’ve visited the location, or if the company has recently hired new management, you may want to choose a different lender, whose employees have more experience providing loans to their clients.
Rates, Fees, and Interest
How much you will have to pay in the end depends on a variety of considerations. First is how much you borrow. If you need quite a lot of money to cover a major emergency, your principal amount will, of course, be higher. Interest is calculated on how much you borrow, and how long your terms are. If at all possible, choose an auto title lender that provides you the longest terms – this will make each individual payment a little lower. Finally, fees should be no more than 30% of the total principle according to California state law. These should not be added to the principal until after the interest is calculated because you should not have to pay interest on the fees.
Most of the time, you’ll want to choose the title lender that is willing to offer you the lowest interest rates and fees. However, if a title lender near you seems more trustworthy, and is willing to offer you multiple payment plans, but has slightly higher interest rates, you may still want to borrow from them, because the experience may be more pleasant overall.
All title lenders have a slightly different approval process. While having good credit is almost never a concern for title lenders, there may be other considerations that disqualify a borrower. For example, some title lenders may require that you prove income before you can borrow. Others may require that your car carry gap insurance before you can borrow. Ask each company you are considering what their approval guidelines consist of before you begin the process.
Of course, you’ll want to choose a title lender that will approve your application; but if possible, choose a lender that won’t check your credit score. Every time your score is checked, a small hit lowers your score just a bit. And while you may find a company that will approve your application without proof of income, keeps in mind that a loan officer at your local auto title loan company can help you choose the best payment plan if they know what your budget looks like.
Length of Payment Term
Finally, look at the maximum allowable term length to choose the best title lender. Most title loans are given for a period of 30 to 60 days, but you may find a company that allows rollovers without penalties to extend your loan terms to a more reasonable term. Also, be sure to ask if there is a penalty for paying your loan off early. Because interest is calculated in part by the length of the term, you could save a bit of money by paying early; you won’t have to pay the interest that would have been calculated on the loan in the following days or months.
If the loan term is too short and will make it difficult for you to keep paying your regular bills, it may be best to walk away if you can. The whole point of an auto title loan is to make it easier to cover emergencies without giving up your whole paycheck. Take your time to search for a title lender that offers you the loan term you need to keep your budget on track.
Putting It All Together
At the end of the day, you may find that there is a clear front-runner for the title lender near you, that you want to work with. However, if you have multiple options from in your city and the surrounding areas, you now have a lot of information about each to compare their services. Go into each office and speak with the receptionist or loan officer. Get a feel for how willing they are to work with you, and how quickly each application and approval process may be.
Check out their website or social media presence for even more information on how each company treats their customers. If they interact frequently, have a blog full of helpful articles and tips, and do more than just present their name on an empty site or profile, then you can bet that they will be as equally helpful and present in your in-person dealings with them as a title lender. Reviews online are another great thing to check out, to be sure that customers aren’t unhappy with their services. If you can’t find any specific reviews for local title lenders on Yelp or other review sites, try searching any social media websites where the company has a profile for mentions – you are likely to find any customer service issues that have been addressed, and can consider for yourself how they handled the situation.
The final decision should be a company that makes you feel comfortable. There should be no stress or worry when you hand over your title. Ideally, you’ll find the perfect title lender that you can come to again in the future should you ever need to cover another emergency, or if you ever want a bit of last-minute funding for a vacation or the holidays.