October 14, 2019
7 Reasons to Get a Title Loan in Alabama
Car title loans have risen in popularity in Alabama as a good way to get a short-term loan. In short, a car title loan is when you borrow money against the value of your vehicle. This makes it a secured loan so there’s less risk for the loan provider, allowing them to offer loans to a wider range of Alabamians.
Crucially, auto title loans in Florence, Alabama don’t require a credit check, so you don’t need to worry if you’ve had niggling credit issues in the past. They’re a great way to get credit quickly – you can be in and out the door in 20 minutes in the majority of cases.
Here we rundown some of the reasons that car title loans in Alabama can be a smart choice and the regulations that are in place to ensure you as a consumer get a fair deal every time.
Getting a Title Loan in Alabama
1 – Alabama Title Loan Companies Are Strictly Regulated
Alabama title loan companies are governed by strict laws that ensure consumers are protected. Alabama car title loan companies must be licensed, which means they are regulated by the state. If you ever believe a title loan company in Alabama wronged you or acted fraudulently, there are laws outlined by the state that allow you to take legal action. If you took out a loan from a title loan company that wasn’t licensed, the loan agreement would be void.
In Alabama, you must be at least 19 years old to take out a title loan. Most of the laws that govern title loan companies in Alabama are shared by pawnbrokers. This makes things like false advertising illegal, and title loan companies can’t offer insurance.
2 – Title Loan Companies Are Not Allowed to Charge Very High Interest Rates
Title loan companies in Alabama are not allowed to charge exorbitant rates of interest. If you agree to pay a set charge instead of interest, the charge is not allowed to be more than 25% of the loan per month. Many title loan providers offer lower charges than this, but it’s good to know that they cannot legally charge more than this.
3 – You Continue to Have Full Use of Your Vehicle
When you take out a title loan in Florence, Alabama, the lender can take possession of your vehicle’s title but you will have full use of your vehicle over the course of the loan. During this time, the provider will have a lien against the title of the vehicle for the full amount of the loan plus interest. This essentially means they have the first right to the vehicle in the unlikely event that you don’t repay the loan.
4 – No-One Else Can Claim Your Car While It’s Under This Agreement
While this lien is on the vehicle, no other person or business can claim the vehicle as theirs. If you have problems with creditors, you don’t have to worry about them claiming the title of your vehicle. You don’t have to worry about someone else paying the balance of the loan or making an alternative agreement with the loan provider to get your car. You are protected by law.
5 – You Have Time to Repay a Loan Even if You Miss the Repayment Date
If you can’t pay back the loan by the due date, your vehicle is not immediately turned over to the loan provider. You have an additional 30 days to repay the loan. However, if you are late with a payment, the title loan provider has the right to add an additional charge up to the value of the original charge. After an additional 30 days have lapsed, if you still haven’t made full payment then the provider is allowed to repossess the vehicle.
Car title loan providers don’t require you to jump through all of the hoops that a bank will. The transaction is simple – you’re putting your car up as collateral for a loan in the same way people use their house as collateral for a mortgage. If you pay the loan back in time, your car title is returned to you. If you don’t pay back the loan and continue not to pay it, the car is forfeited to the car title loan provider.
Because the transaction is simple, there’s no credit check required. The auto title loan provider in Florence, Alabama knows that if you fail to repay the loan that the car is there as a backup, so there’s less risk to them. They don’t need to know irrelevant details about how your credit rating was poor or you had financing issues in the past.
This makes car title loans great for a quick cash advance.
7 – You Can Use the Value of Your Vehicle to Get Better Terms
With a poor credit rating or a spotty employment record, a bank is unlikely to loan you a significant amount of money. Even getting a credit card or extending an overdraft can feel like pulling teeth.
If you’ve already paid off your vehicle, it represents value that you can use. Banks are happy to use properties like houses as collateral as they are typically worth a lot, but this only works if you already have a house fully paid off. Most people who need a short term loan in a hurry don’t have a fully paid off house!
A car title loan provider recognizes that value in your vehicle and lets you use it as collateral. In many cases, this means that you can borrow a lot more than you would be able to through other means. You may also be offered better terms, as you are getting a secured loan as opposed to an unsecured loan. This represents less risk to the provider, so can often translate to better interest rates. In the end, you could be paying back less than if you’ve chosen other forms of credit.