When someone needs quick cash for emergency reasons, one of the easiest ways is to take a title loan. For sure you have already heard of this when you are looking for your options. But you have to make sure that you fully understand what a title loan is, how it works, the loan regulations, and whether or not this is the best option for you.
Introduction to Title Loans
Title loans require collateral to be granted by the lender. They are usually assets like a car, insured land, jewelry, and other possessions with monetary value. These days, title loans are very popular because the credit rating is not a huge deal to be qualified and to be granted the application. Still, borrowers should take this financial obligation seriously no matter how small or big the loan amount is. Or else, the borrower will lose the asset provided for the collateral.
Tenessee title loan regulations are less strict and are usually short-term which usually has a term of 15 – 30 days, but can also be longer. According to the Tennessee Title Pledge Act, it states that the lender is allowed to issue a 30-day loan period. This act also allows renewal of the terms. The maximum interest rate is 2% plus any additional fees based on the title loan laws. Also, the title loan fees should only be limited to ⅕ of the loans’ principal amount.
Title Loans – How Do They Work?
Car title loans are the most common these days. For the car loan to be approved, the borrower needs to own a car as collateral. The borrower should then sign the title to the lender as his or her asset. Usually, the loan company can lend the borrower up to 25% of the car’s estimated value. Then the lender keeps the cars’ title as collateral in case the borrower is not able to repay the loan amount plus the interest in full. In case the borrower fails to repay, the car will be repossessed by the lender. They will have an option to sell the asset to gain back their lost profit.
Title Loan Regulations in Tennessee
Like in other places, Tennessee also has its own regulations for title loans. If one is interested to apply for a car title loan online, there are basic requirements that need to be met. For title loans of more than $2500, the potential borrower must be 18-years-old and above. Should be able to provide proof of ownership of his or her vehicle and insurance. Also, proof of monthly income is required. The borrower should also present a government-issued ID.
Any time of loans can be risky. That is why it is crucial that the potential borrower fully understands what they are getting themselves into. It is not easy to hand over your prized vehicle to the lender for some cash. But sometimes, this is the only option, especially during medical emergencies. But before you go ahead and apply for one, make sure that you are 100% sure that you can repay in time and you understand the regulations of the lender.