“Car title loans.” How’s that for a change of pace?
Okay, so I’m talking to this dude, and out of the blue, he asks what it takes to get a title loan.
It seems that a while back I mentioned that I worked IT for Pioneer Loan. Therefore I must know all there is to know about title loans. Including the details of how each and every one of the competitors operates. Right?
It’s not like the guy is stupid, he just has no clue about how it all works, and he’s trying to get the best deal he can. –You can’t blame him for that. But, at the end of the day, he didn’t know what a clean title was, and the bank still owns his car. So he’s screwed.
At any rate, I helped keep the Pioneer Loan network up and running and spent time talking to the loan officers, so yes, I know a little about title loans; at least in the state of Nevada. And after having to explain title loans to this otherwise bright guy, I decided I’d get up on my soapbox and explain a little about how the world works.
Before I start let me say that I not only worked for Pioneer Loan, the owners are close friends. I’m not going to sugar coat anything because of that, I just thought I should be upfront about things.
So here goes:
A title loan means that the company holds your title until you pay them what you owe them. A lot like the bank that held on to the title until you paid off their loan.
If you don’t own your car, stay home.
If a company willing to give you a “title loan” on a title you don’t have, there’s something very wrong. –There are exceptions, but most of the legit exceptions are nothing more than refinancing your loan so some other bank owns it.
- Here are the basics of car title loans:
- As stated above; you need to have a clean title.
–Which means no leans.
- The title must be in your name.
–You can’t get a title loan on your mother’s car. I don’t care how often she lets you drive it because it’s still her car.
-It’s like this: Just because your mother put you in her will and lets you live in her basement rent free does not mean you own the house.
(Trust me; after talking to clients, and listening to the loan officers, this is not nearly as stupid as it sounds.)
- If there’s a second name on the title you can still get a loan, but they need to come in and do their share of the paperwork.
–If someone else is on the title and they don’t come in the title loan company runs the risk of becoming a casualty in a messy divorce.
- The car also has to be in running condition so you can bring it down and they can look it over.
–After all, at the end of the day, a new Mercedes that was t-boned by a semi is just so much scrap metal.
- You have to be able to pay the loan back.
–Why would anybody loan you money if they knew you couldn’t pay them back? In fact, the state wrote that bit into the law.
- The company doesn’t want your car. They want your money.
–Just like the bank or that friendly dude at the bar who offered to loan you the cash at a rate “he wouldn’t give his own mother.”
- If you’re in the military or are a dependant they probably don’t want to give you a title loan, because the Military Lending Act caps the interest that can be charged at a rate that is, in many cases, less than their cost of doing business.
–Employees have to be paid, insurance has to be paid, the electric bill has to be paid, and for some odd reason, the landlord wants the rent.
- You have to be old enough to sign a contract. In Nevada, the age is 18.
–That also means you can get yourself into serious debt, but you can’t gamble what little money you have in the hopes of hitting Mega-Bucks or try and drink your troubles away like a grownup.
- Title Loan companies are not in the used car business.
They really and truly don’t want to repo your car. They will, but when they sell it they can only get the amount of the loan, plus some state approved fees and any costs associated with the repossession.
–Not a real profitable process is it?
- The interest on title loans accrues every 30 days, not yearly.
–7.99% sounds good, but that’s every 30 days, so you’re looking at right about 96% per year.
Now I bet your credit card interest doesn’t look so bad.
I’m sure I missed a bunch of stuff, but to me, the bottom line is this.
Only borrow money you can actually pay back.
Only use title loans as short-term money, not as a second source of income.
Because, in the long run, the people loaning you money are not doing it out of the goodness of their hearts, They’re doing it to make money, the longer you owe them the money the more interest you pay, and if they must, they will repo your car. –Business is business. No?
(As far as I know, that bit about not repoing your only method of getting to work only applies to the IRS.)
There’s a FAQ on the Pioneer Loan website.
–Read it, then call them with questions. They really are a friendly bunch.
Climbing down off my soapbox, running to the head, then getting more coffee. LRR