A title loan is a way to use your motor vehicle to borrow money. A lender decides how much you can borrow, depending on the value of your car. Title loans can be for relatively small amounts, such as between $250 and $1,500, but can also be for greater amounts, such as between $5,000 and $10,000.
The length of these loans is 30 days after the date of the Title Loan Agreement but may be extended by mutual consent for one or more periods of 30 days. In a title loan deal, you hold and drive your motor vehicle, while the lender holds the title of your motor vehicle as security for the payment of the loan. Continue reading this article and get knowledge about title loans.
The lender can and will repossess your motor vehicle, auction it, and pocket what you owe if you can not repay your loan. If this occurs, you are entitled to collect, within 30 days of the sale of the motor vehicle, the proceeds of the sale in excess of the amount due on the loan (including the principal amount, the interest at the date of exchange, and the fair costs of repossessing and selling the vehicle to the lender).
Because of the possibility of losing your vehicle if you skip a single payment, before applying for a title loan, you should consider the following:
Look for alternatives to loaning securities.
- A title loan can seem enticing at first glance, especially if you need instant cash or are having trouble getting a loan from a conventional lender, such as a bank or credit union. However, you risk losing one of your most precious possessions and your transportation if you take out a title loan. Instead of a loan for the title, you might consider:
- Working out a payment plan for any title loan you take to pay off with the seller or provider;
- Contact a credit counseling program, which, depending on the town or county where you live, will help you fix your finances at a discounted rate or for free;
- Borrow from friends or family; or borrow from friends or family; or
- Seek financial aid from a government agency or charity.
Understand what you need to pay
For the first $2,000 you borrow, Florida law requires a title lender to charge you interest on your loan of up to 30 percent per year; 24 percent annually on any extra amount you borrow between $2,000 and $3,000, and 18 percent annually on any amount you borrow above $3,000.
This assumes, for instance, that you would have to repay $1,000 in principal and up to $300 in accrued interest over the course of a year if you borrow $1,000. If you quit paying off your loan after a month, say, you’re going to have to pay $1,000 back plus (approximately) $25 in interest. To pay off the title loan and stop repossession of your vehicle, think carefully about whether you will have the money in time.
Get the specifics you need.
Two laws in Florida govern financial loans secured by a car. The Florida Title Loan Act allows lenders to be approved by the state Financial Regulation Office under Chapter 537 of the Florida Statutes.
By statute, you and the lender must sign a written agreement before receiving your loan in order to receive a loan. Before signing it, make sure you read and understand the agreement. You must indicate how much you are borrowing and what the interest rate would be (called the “amount financed”).
The loan agreement must also clarify, in compliance with Chapter 537, that if you do not repay the loan, the lender will take possession of your car, sell it and retain the proceeds up to the amount owed, along with any appropriate expenses to fund the trade-in and redemption. Oh. Sale. Often, if the lender wants to repossess your car, the lender must tell you and you will have the option of making plans to return it instead of calling in a repossession agent. Any personal property you have in the car should be able to be removed.
Often, once the car is sold, if you pay off your debt and any fair expenses, you can always get it back. 10 days before the time and location of the sale, the lender must contact you and give you an account of the amount owed.
Not all of the rights provided in Chapter 537 are included in Chapter 516. A written estimate of the amount lent and the interest rate must be given to you by the lender; however, repossession procedures, sales procedures, and what lenders may charge as additional fees are not as detailed as in Chapter 537.
You can ask the lender what their rules are if you plan to take a financial loan from a lender. Report. Notification. Before a repossession or sale and if, before it is sold and at what cost, you will get your car back.
Know that for the investor, a title loan is not risky, but for you, it can be very risky.