How Many Title Loans Can You Have?

In life, one can encounter a financial crisis at any one point in his or her life when he or she least expects it. At such times you might have heard of Title Loan as a way of funding your financial needs without delay. But here’s the million-dollar question: How many title loans can you have?

If you are asking yourself whether you can do multiple loans or whether one is going deeper into financial troubles, then you are at the right place. In this article, I will give you a detailed description of every aspect that you should know starting from the initial step.

Read also: How To Apply For FHA Loan In NC

What Are Title Loans?

A title loan is another type of secured loan wherein the borrower gets to pledge a car as the security for the loan. The borrowers convey their car title or the title ownership to the lender till the loan is paid off. Title loans are commonly short-term and have rather high interest rates; therefore, they are not very suitable for some drivers.

As stated, title loans differ from other types of loans since the client’s credit score is not as important when applying for title loans. However, be aware that, on the negative side, you will lose your car since you will not be in a position to repay the loan on time.

How Do Title Loans Work?

Auto title loans also known as car title loans are short-term loans that come with very high rates of interest which have to be secured against the vehicle. In this case, you give your car’s title to the lender but you continue using the car as you make your payments.

The lender offers to pay the cash according to Actova a fraction of the car value ranging from 25% to 50%. You repay the loan within a given time of, usually, 15 to 30 days. If you do not pay back the amount then the car can be repossessed to get back the money by the lender.

Eligibility Criteria for Title Loans

• You have to be the registered owner of your car, (if not fully paid for) the car has to have substantial value left on it.
• The vehicle must be free from any title encumbrances, which means that no other parties have interests in it.
• To apply for a service you are required to provide identification documents and on some occasions proof of income.

The Legal Limits on Title Loans

The legal limits on title loans change from state to state. Some areas have strict rules. They might cap interest rates or ban title loans completely. But in other places, laws are more relaxed. Lenders can set higher interest rates & face fewer rules. Plus, lenders often have their own guidelines. They might limit how many loans you can or have certain requirements to qualify. It’s really important to know both the laws where you live & what the lender expects before going for a title loan.

Can You Have Multiple Title Loans?

Although it is impossible to obtain more than one title loan on a single vehicle, it is very possible to obtain a title loan on as many vehicles as you have. Most lenders demand the title of the car as a way of guarantee and as such you can only use the car to guarantee one loan. However, applying for several loans in respect of different vehicles is dangerous.

It becomes easy to borrow with high interest rates and short repayable periods hence falling into a cycle of borrowing. It’s important not to get into several title loans because of your financial position.

Risks of Taking Out Multiple Title Loans

If one takes several title loans, then a person can end up in a very dangerous credit spiral. ENM has attracted criticisms because of high interest rates and short repayment terms which makes it possible for you to end up paying off one loan let alone several.

Failure to make payments can lead to the seizure of your car(s), thou it is often the only mode of transport to and from work, and school among other activities. It is a downward spiral and the more loans one accumulates the more difficult it becomes to climb that spiral.

How Many Title Loans Can You Have

Strategies for Managing Multiple Title Loans

• Prioritize Payments: Perhaps, the best way is to pay the most on the loan with the highest interest rate.
• Negotiate with Lenders: It is also important to note that some Lenders will change their terms to accommodate your cash flow if you explain your situation.
• Consolidate Your Debt: Consider the option of debt consolidation so that to have many credits on the terms of payment of which it is possible to lower an interest.

Alternatives to Title Loans

• Personal Loans: Personal loans are easier than other types of loans and, while it may be more difficult to get them if you have bad credit, the terms of the loan will be better.
• Credit Union Loans: Banks including credit unions usually loan at comparatively cheaper rates as well as better terms than the title loan companies.
• Peer-to-Peer Lending: You can get money from people who are ready to become your lenders and use the services of such websites as LendingClub or Prosper.

How to Qualify for a Title Loan

Getting a title loan is easy if one owns his or her car or if the car is almost paid off. One of the requirements is that the car’s title cannot be encumbered which means that no other entity or individual has to have any interest in it or lien. Identity proofs like a driver’s license are also demanded by the lenders as well as income proofs to confirm your ability to pay the loan back.

Getting approved does not always call for a credit check, thus it is advisable to have your vehicle in perfect condition. The satisfaction of these qualities assists in obtaining the required loan quickly.

What Happens If You Default on a Title Loan?

Pay for the agreed amount of money; signing on the title results in the repossessing of the car in cases where one has taken a title loan. They will normally sell it to pay off the loan amount. Repossession means that you will be without a car and it also can follow additional costs or charges. Furthermore, while title loans are likely not to be reported in the credit bureaus, a car repossession will affect your credit score if it’s reported or if you owe for the difference.

Read more: Can I Get A Loan For A Lawyer

Can You Refinance a Title Loan?

Yes, you can refinance a title loan but doing it depends on several factors that we will discuss below. To a basic level, refinancing refers to the process of getting a fresh loan with the aim of repaying the previous one and all debt incurred in the process could be done at better terms in addition to attractive interest rates. This may help you elongate your period of repaying the loan and in the process offer you cheaper monthly installments.

However, refinancing also had the possibility of raising the cumulative interest charges made throughout the course. This is why it is good to compare new loan offers and most of all read through the terms before deciding to refinance because it might not be financially advantageous for you in the long run.

Impact of Title Loans on Credit Scores

Auto title loans usually do not influence your credit score because these products are usually not likely to be reported to credit rating agencies. Nevertheless, this is likely to harm your credit status if you fail to repay your loan and your car is repossessed.

Repossession can also hurt your credit rating either when it is stated to the credit bureaus or when a deficiency balance is sought. Besides, if the loan is refinanced it will also have an indirect implication on creditworthiness at some point and so if one misses payments.

How to Pay Off Multiple Title Loans

Borrowers usually find that it is possible to take multiple title loan pay-off strategies. The best approach is to take time and develop an accrual budget that will enable you to know how to minimize expenditure on certain necessities so that money is diverted to paying back the loans. If possible borrow with low interest rates and focus on repaying those which attract higher charges.

Debt should be refinanced meaning that one should be able to consolidate his or her debts with one loan that has better provisions. Pay your bills: contact the lenders and try to find ways of paying lower installments or getting an extension. It is resistant and you should therefore keep track of the plan and make necessary adjustments for your benefit.

Conclusion

In conclusion, title loans are wonderful for just about any urgent situation, nonetheless, they consist of drawbacks, first of all, they truly are dangerous when you’re planning to sign more than one loan. There are several pitfalls included in the decision: the presence of higher interest rates and shorter periods for the repayment of loans lead to a cycle of debt in which, ultimately, vehicles are repossessed.

Most importantly it is important to know the legal abilities, hazards, and measures involved in acquiring these loans. More often than not, it is recommended that one looks for other sources of financing and if possible, he or she should have proven strategies for paying back. Knowing your rights and being careful also enables one to reduce his or her expenses and borrow wisely.