Will I Go To Jail for Falling Behind On a Title Loan?
It’s not necessarily hard to find affordable title loans these days. There are hundreds of options both locally and online for creditworthy applicants. You simply have to apply with a lender, wait for with a credit decision, and in doing so, you can keep driving your vehicle. It’s simple enough that most applicants can finish an application in 10-2 minutes. Most lenders will ask for your name, government-issued identification card (ID), and proof of your income source. The biggest drawback with online title loans is that most companies will require you to hand over your pink slip as collateral.
The problem is that many people struggle to make payments on their loans. When they first take out a title loan everything is good. They have a large sum of cash and they’re able to make the monthly payment on time. The problems start down the road, usually after 3-6 months of making payments. As a result, they end up defaulting on their online title loans. This results in the question “Will I got to jail for defaulting on a title loan?” This article will answer this question according to the law, but before that, you have to understand more about title loan itself.
With most online title loans, you have to provide some type of collateral. Instead of your proof of income, getting a title loan requires you to hand over your pink slip for two reasons. Your qualifications are often not based on your credit score. Like most short term loans, you can get cash once your application is approved. The most common type of this short term loan involves a title pawn. In other words, as a borrower, it is mandatory for you to own a vehicle. You also have to sign over ownership to an auto title lender. The company will typically write the loan for up to 50% of the vehicle’s value. They will also keep the pink slip for security, in case of default.
A borrower usually has to pay within one month and the loans can range from a small amount to a very high value. If you default on the loan, your vehicle will be taken by the lender.
How Much Does a Title Loan Cost?
An average monthly salary is required for most online title loans. The amount you have to pay can be high, sometimes as high as 10% of what you have borrowed. In some cases higher loan amounts can be put in place for a high dollar amount title pawn. For instance, if you applied for $2,000 worth of title loan, you will likely have to pay a tenth of the cost monthly, which is equal to $200. In case you borrow money for a year, you have to determine the annual percentage rate (APR) from the lender. This is determined by your borrowed money amount, fees, interest rate, and the period of money lending.