In auto title loan or, in other words, auto pawn loan driver provides a title to its owned vehicle as collateral to receive a loan. Borrower who gets the auto title loan allows the lender to place a lien on its car title and temporarily waives the hard copy of its vehicle title in exchange for a loan. When the loan is repaid, the lien is removed and the car title is returned to its owner. Auto title loan is one of secured loans, but unlike most conventional pawn situations, driver can continue to use its owned vehicle as it is providing collateral, namely, vehicle does not have to be taken to a “pawn shop” to be impounded. But if a borrower defaults its payments, the vehicle which is owned and used by borrower can be taken away.
Auto title loan means that borrower provides its vehicle as a collateral in order to get a loan. In case of auto title loan everyone who has a car and who needs money has an opportunity to borrow a loan. Of course, it is not that simple. Potential borrower has to be the owner of vehicle which is given as a collateral, and then it can go to the lender and submit an application for auto title loan. As it is known, small loans do not need any collateral or guarantor, but sometimes small loan is insufficient. If you need a bigger amount of money, auto title loan is a great solution. All you have to do to get the money is to pledge your vehicle and receive the money for realization of your needs and wants. One of the greatest advantages of auto title loan is fact that borrower can continue to drive a car which is pledged. Borrower can drive its car until it repays a loan, but if borrower has some serious difficulties with loan repayment, lender has rights to take away the pledged car. When the car is pledged as a collateral, the lender becomes an owner of pledged car, but the borrower becomes a holder of its own car until the loan is repaid. When the loan with interests is fully repaid, pledged car is re-registered to borrower’s name, and borrower becomes a full-fledged car owner again.
Auto title loan is a great opportunity also for those, who have negative credit history or who cannot get other loans because of inappropriate age. Negative credit history means that borrower has had some difficulties with previous loan repayment, namely, it still has debts or has regularly hampered payments. It is one of those loans where lenders do not pay special attention to potential client’s credit history. Although auto title loan is easy obtainable even with negative credit history, it does not mean that you can treat your credit commitments irresponsibly. Everyone can face the situation when other type of loan which requires positive credit history is needed. To receive the auto title loan potential borrower has to be at least 18 or 19 years old. The majority of other loans are not available to persons who are younger than 18 or 19 years, therefore, auto title loan is a great opportunity to get the money. Of course, the main condition is unchanged – borrower has to be an owner of pledged car. Nowadays a lot of persons who are 18 and 19 years old have their own cars, therefore, there is no problems to get the auto title loan.
When potential client wants to borrow money, lender estimates the car for pledging. This car must not be older than 20 years. If a car corresponds to all of lender’s conditions, lender can lend money up to 90% from car’s market value. It means that the amount of loan can be even several thousands. Of course, auto title loan, like other loans, have an interest rate which has to be repaid with loan principal. The good news is that auto title loans has low interest rates and their repayment term can be up to 72 months or, in other words, 6 years. Loan repayment term is determined according to the amount of loan, as well as to borrower’s income. If repayment time is long, monthly payments are small, and vice versa. However, every borrower should understand simple coherence – the longer is loan repayment time, the longer are credit commitments with lender. Longer credit commitments mean that borrower overpays its loan on interests expense. It is always recommended to get rid of loan as soon as possible.
To receive the auto title loan potential client has to correspond to lender’s criteria. Potential borrower has to be of legal age, as well as a citizen of Georgia or a non-citizen with residence permit. The most important criteria – as mentioned before, borrower has to be an owner of pledged car. Vehicle must not be older than 20 years, it must have a roadworthiness and public liability insurance. If market value of vehicle is bigger, it must have hull insurance as well. Although borrower can have debts, for example, unpaid fast loan, borrower must not have debts which are connected with car which is planned to be pledged, namely, the car cannot be taken on lease or pledged somewhere else.
If potential client and its car corresponds to lender’s preconditions, it can submit an application for auto title loan. It can be done both in person and on the Internet. Application for auto title loan must include an information about borrower and its vehicle. According to this information the lender will decide whether or not to hand out the auto title loan. The lender will estimate borrower’s car and ability to pay, and will make an individual offer which will include the possible amount of loan, as well as interest rate. If lender’s offer and other conditions will satisfy the potential client, the borrower will have to sign a contract and get the power of attorney. After that borrower has to take its power of attorney and go to the Road Safety Directorate to re-register its owned vehicle to lender’s name. When it will be done, RSD will notify the lender about re-registration, but lender will transfer the auto title loan to borrower’s bank account.