If you’re feeling a bit of a financial pinch at the moment, know that you are not alone. The unemployment rates in Georgia jumped to 14.74% in 2020 alone, due to the market distress that COVID-19 put businesses under.
This is a time where having assets is a plus, and you can use them to get some emergency funds for a short period of time. Enter car title loans!
Getting a car title loan can be a great option for you. Yet, it’s crucial for you to understand what they entail. Keep reading for the top five things you need to know about getting a car title loan in Georgia.
1. Car Title Loan 101: Short-Term Emergency Funds
The very first step to getting a car title loan is understanding the nuances of this type of financial instrument.
Car title loans were designed for people who need access to fast cash in order to manage debt or deal with an emergency. It’s not a long term type of investment financial option.
You can use a car title loan if you outright own your car, or you have a minimal amount left to pay for complete ownership. It’s also sometimes known as a fast auto loan.
2. Short Loan Duration
The average for a car title loan is around 30 days, which is a rather short duration of time compared to other types of loans. The process works by giving the lender your vehicle’s title.
In return, the lender will give you cash, and then it’s time to repay the loan. As with any other type of loan, you’re expected to pay back the lender the money owed plus interest.
3. Ease of Access
One of the greatest perks of title loans is that almost anyone can get one. Of course, try your best to pick a professional and trustworthy lender to avoid taking too much risk and maybe even running into a fraudulent company.
Even with bad credit, you can still qualify for a title loan. In fact, most car title loan companies do not pull credit reports, since they’ll be using your vehicle as collateral.
4. Car Ownership or Equity Is a Must
The key requirement of being eligible for a car title loan is either owning your car free and clear. After all, the whole loan is based on using your car as collateral. At Georgia Title Loans, our loans will range from $200 up to $50,000.
You’ll also want to know that the interest rates have been capped at 36%, after the passing of this Georgia senate bill.
Moreover, even though this type of loan is known as a “car” title loan, it can applies to different types of vehicles, like motorcycles and trucks.
5. Car Title Loans Can Come With High-Interest Rates and Fees
Unfortunately, in order to make car title loans more accessible to people, lenders have to face a high percentage of risk. Therefore, you’ll find that most lenders charge higher interest rates in order to finance the loan.
For instance, if you’re looking to get a 30-day car title loan for $1000 and the fee is 25%, then you’re expected to pay back $1250, in addition to any additional fees, at the end of the month.
Looking at it from the perspective of an annual percentage rate (APR), things can appear grim and expensive. That’s why it’s important for you to understand the terms of your loan, including the APR, and the total cost of the loan before signing any papers.
6. You Could Lose Your Car – But It’s Not Common
You have to be rather financially aware and careful when it comes to short-term loans. With this type of loan, if you can’t pay the lender back on time, there are two options that the lender can take.
The first would be letting you roll over your existing loan into a new one, with additional fees and interest added. In this case, you would end up paying double the fees on your original loan. Problems start accumulating when you fall into this cycle of borrowing more money, so it is never recommended. Most title loan companies will do this, but they will always encourage you to be smart and pay back the original loan on time.
The second option for the lender would be to repossess your car, but the good news is that this rarely happens. But if it does, if you want to have your car back, you’ll have to pay more in fees, in addition to your past-due amount that you originally borrowed.
That’s one of the main mistakes you have to avoid when it comes to short-term loans that use one of your assets as collateral.
Understanding Car Title Loans
If you’re unfamiliar with what a car title loan can bring to your financial table, they might seem a bit intimidating at first glance. However, by keeping in mind the key six things you need to understand about car title loans, you can begin your search armed with good information.
And, if you’re still looking for additional tips on how to better your finances, all you have to do is take a look through our blog for all the latest tips and strategies that you could possibly need.
For now, we’d be delighted if you contact us to answer any questions or concerns you might have about getting car title loans in Georgia.