In an ideal world, no one would ever need to borrow money in order to pay their bills, cover unexpected expenses, or consolidate debts. But unfortunately, things don’t always work out this way.
Many people who are in need of fast cash seek out auto money title loans, which are also known as car title loans. An auto title loan is a type of secured loan that allows borrowers to use the title to their vehicle as collateral.
If you obtain an auto title loan, you can continue to use your vehicle while you make payments. The lender will only take possession of your vehicle if you fail to repay your debt.
Applications for these loans are typically processed quickly, which is why this type of loan is ideal for people who need cash as soon as possible. But how much will you be able to borrow through an auto title loan? Here’s what you need to know:
What Factors Determine How Much I Can Borrow?
Most people are eager to find out how much they will be allowed to borrow if they apply for an auto title loan. Figuring out how much you qualify for is not easy. The lender will take a number of factors into consideration when determining how much you qualify for, including:
- The value of your vehicle
- Your income
- Local laws
The Value of Your Vehicle
The title to your vehicle is used as collateral to support an auto title loan. In other words, if you stop making payments, the lender will take possession of your vehicle to satisfy your debt.
Because your vehicle is used as collateral, an auto title lender will never allow you to borrow more than the value of your vehicle. This is why calculating the value of your vehicle is such an important part of the application and qualification process for auto title loans.
You will be asked to submit photos of your vehicle during the application process so your lender can determine how much it is worth. To calculate the value of your vehicle, the lender will consider many factors, including its age, model, make, condition, and mileage.
Lenders will typically allow borrowers to borrow up to a certain percentage of their vehicle’s value. The exact percentage varies from lender-to-lender, so it’s best to ask a loan specialist for more information.
Equity is another factor that will affect how much you will be able to borrow through an auto title loan. Equity is defined as the difference between the value of your vehicle and the amount you still owe on it.
For example, say your vehicle is worth $10,000 and you still owe $2,000 on it. In this case, the equity in your vehicle is $8,000. If you were to stop making payments on your auto title loan, the lender would only be able to recoup $8,000 by taking possession of your vehicle. This means you will not be able to borrow more than $8,000 through an auto title loan even though your car is worth $10,000.
The lender will also need to consider your monthly income when determining how much you should be allowed to borrow. This is because the lender will not want to let you borrow more than you can afford to repay.
You will be asked to submit proof of income during the process of applying for a car title loan. The lender will not process your application without this documentation. However, this does not mean that you need to be employed in order to get approved for an auto title loan.
The lender needs to see proof of any form of income, regardless of whether or not that comes from a job. For example, if you receive Social Security or workers’ compensation benefits, this counts as income.
As long as you can provide proof of some sort of income, being unemployed will not prevent you from getting an auto title loan.
Some states have established laws that set minimum and maximum limits for auto title loans. If you live in one of these states, the amount you are approved could be affected by these laws.
For example, in the state of Illinois, auto title lenders cannot let you borrow more than $4,000 or up to 50% of your monthly income, whichever is lower. The maximum limit is even lower in Tennessee, where it is set at $2,500. The maximum limit in New Hampshire, on the other hand, is $10,000.
But remember, these laws have only been established in some states. Talk to your lender to find out whether the state you reside in has passed laws that restrict how much you are able to borrow.
These are some of the many factors that will be taken into consideration when determining how much a borrower is allowed to obtain through an auto title loan.
What Can I Do With Money Obtained Through An Auto Title Loan?
Some lenders place certain restrictions on how borrowers can use the money they obtained through loans. For example, if you take out a student loan, the money must be used on educational expenses such as tuition, books, and supplies.
However, there are no rules or restrictions that govern how you can use the money you obtain through an auto title loan. If you apply for an auto title loan, the lender will not ask you what you plan on doing with the money. The lender does not care how you use the money as long as you pay it back according to the terms in your loan agreement.
Being able to use the money at your discretion is one of the many benefits of auto title loans.
How Can I Find Out How Much I Can Borrow?
You can find out if you qualify for an auto title loan—and how much you are able to borrow—by talking to a loan specialist today. You can either call 1-855-713-6522 to speak to a loan specialist directly or fill out the short form on our website. If you choose to fill out the form, a loan specialist will reach out to you shortly to discuss how much you will be able to borrow.
Don’t wait any longer to secure the cash you need—get in touch with us today to discuss taking out an auto title loan.