Basically, a cat title loan is a kind of debt that is provided where a borrower offers the title of his or her car as security. This type of loan is popular because it is easier to get compared to a conventional loan, such as a bank loan. It takes much less time to obtain the loan amount an this usually occurs in less than an hour. Moreover; a credit check is not required because the primary basis for the title loan is the price of the car if it is sold in the current market.
However, it is important to realize that the car title loan amount would not be the same as the actual market value of the automobile. Most companies set the maximum amount to 50 percent of this value although some may offer a slightly higher amount. However, certain states have developed laws governing the car title loan. For example, in Illinois, there is a maximum loan amount and this is $4,000.
The loan processing fee for a vehicle title loan cannot be more than $75 if the loan amount does not exceed $5,000. However, beyond this value, there is no cap. In Illinois, the monthly payment cannot be more than 50 percent of the monthly gross income of the borrower. It is also required that installments be divided equally and that balloon payments are not allowed. Also, it is possible to renew the loan only when the borrower has already repaid at least one fifth of the principal amount.
Consumers usually want to apply for a car title loan to handle unexpected bills, such as medical expenses. This type of loan may also assist those who have poor credit ratings to assist them in boosting their credit scores until such time that are finally eligible for standard loans. Conventional loans, including bank loans, have lower interest rates but they require a minimum credit score.
Car title loan companies usually have simple requirements for an application to be approved. The borrower must show proof of identity, such as a driver’s license or a Social Security number. Proof of income, such as tax returns, pay slips or bank statements, may also be needed. The car title should also be presented and it must be shown that there no loans using the car title as collateral. Lastly, the loan company may want to inspect the car to estimate its selling price. Get more details by clicking here
