How does a title loan work?

[Anonymous]

It's going to take about $2,000 to fix up my van and the shop suggested that I get a title loan. It needs new tires, brakes, both rear wheel bearings, right side CV shaft and it's way overdue for a tune up.  The Van is a 2005 Chevy Uplander with 135K miles. 

I'd like to be able to go to a bank or reputable lender.  Do these loans get denied based on your credit?   Would this be the same as a refinance?  My van was paid off back in 2010.  

[Anonymous]

When someone say's title loan, what come's to my mind is a very high interest loan shark type of loan..in which case I would steer clear of.

How is your current credit situation? Do you have any credit card's with current promotion 0% offers?

I would try to possibly finance your vehicle with a local bank you have a relationship with and see if they will do a 2k loan for 12-24 month's. Stay away from a Title Loan place charging 20%+ interest.

[Kree]

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wrote:

When someone say's title loan, what come's to my mind is a very high interest loan shark type of loan..in which case I would steer clear of.

How is your current credit situation? Do you have any credit card's with current promotion 0% offers?

I would try to possibly finance your vehicle with a local bank you have a relationship with and see if they will do a 2k loan for 12-24 month's. Stay away from a Title Loan place charging 20%+ interest.

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DCU offered me a 3.49% title loan when I was looking at a personal loan,  Don't even have the title, still paying DCU for the car, but when the equity available was much less than I needed I didn't go for it.

[Anonymous]

I understand there are different types of "title loans" but I believe the title loan the repair shop is referring to in this situation is less than desireable.

In which case I would steer clear of, find a local bank or a CU willing to finance your vehicle as colatteral at a decent rate if you qualify.

[Anonymous]

I just got a new Citi double Cash with a CL of $1,000.  I'll only be able to do some of the work and the card will be maxed out.  

[Anonymous]

I wouldn't suggest maxing that card out..do you have any other card's? how are your scores? If you qualify for a Citi DC I would think you should qualify for a small auto loan (using your paid off van as collateral) to pay for the repairs. You may also get a second opinion from a different shop regarding the repairs. Often times repair facilities take advantage of people recommending things get fixed that really don't need to be, and so on. A second opinion is always a good idea in my opinion.

[Watchmann]

A title loan is a loan given using a vehicle's value as collateral.  The loan company puts a lien against your vehicle's title which you surrender to them when you get the loan.  If you default on the loan the loan provider has a lien against your vehicle.  It can work in a pinch if you are confident that you can repay the loan, but I would not recommend using this method unless you just don't have other choices.

[Anonymous]

I would definitely shop around to make sure you are not overpaying for the work. 2k is pretty much the value of the car so would be upside down on the title loan instantly. You will also have to add full coverage insurance (assuming you don't have it already) which depending on your record will easily be atleast a couple hundred every 6 months if not much more. So IMO shop around and see if you can get an unsecured loan to avoid needing 1st party coverage on the car.

[tricie17]

I know sometimes it is easier to go for what may seem viable however, what seems short term (title loan) becomes long term and more money spent than realized.  Stay away from the sharks and think over what you can do.  Even with using a small portion of Citi, such as three hundred and a portion of a paycheck or small loan from a prime company/CU, you should be fine.  Think before doing!!

[Anonymous]

Sorry about the confusion, the shop told me to go to the bank and get a title loan.  I have no idea what you call that type of loan, but it's from a bank.  My own bank said they couldn't loan money on my van because in it's current shape, it isn't worth $2,000.  My next step is to have a friend help with some of the work and save some money.  They told me I would have better luck buying a newer vehicle with less miles and trading this one in.