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Whenever you search for a loan – regardless of whether it’s a traditional, unsecured loan or an auto title loan – you should always be aware of the potential pitfalls. While not every lender will try to scam you, there will always be those who’ll take advantage of anyone who doesn’t know much about the process. So what are some of the tell-tale signs your lender is trying to scam you?
What Are Some Warning Signs I Should Look Out For?
An auto title loan can be a convenient and easy way to get the money you need – and it’s usually a pretty quick process. A lender will value your vehicle and then make you a loan offer based upon how much they think your car is worth.1
Once you have your money, you make your payments like a regular unsecured loan, until the loan is repaid. In the meantime, the lender will apply a lien to your vehicle’s title. This doesn’t mean they own your vehicle, but they do have a stake in it.
In that situation, if you fall behind on your payments, they have the legal right to repossess your car and sell it to recover some of the money you owe, but they should give you time to repay the money first.
Of course, it’s not immediately obvious when you’re shopping for a loan if your lender is trustworthy. You could always ask for recommendations and check the online reviews, but there’s still a chance you could miss some warning signs.
Here are some red flags you should be aware of:
- No vehicle valuation
- Approvals without a credit check
- Telemarketing calls saying you’ve been pre-approved
- Low payout on a newer vehicle
- Asking for personal information about friends and family
- Down payments and processing fees
- Signing the vehicle over to a lender
- Balloon payments
You should not expect to receive any telemarketing calls from any unfamiliar lenders telling you you’ve been prequalified for a loan. That’s because unless you already have a loan with the lender, they have little to no idea what your credit score is, how much your vehicle is worth or what your income might be.
No reputable auto title loan lender will let you borrow money without checking all three first:
- A credit check lets the lender know about your existing credit obligations.
- A vehicle valuation is used to determine how much you may be able to borrow.
- Your income is used to determine how much you can afford to pay each month.
A legitimate lender will always want to value your vehicle before telling you how much you can borrow. It’s often a good idea to have a rough idea of how much your car is worth, but it’s also worth remembering that you won’t be offered the full amount.
There are a number of reasons for this (such as depreciation) but if your vehicle is relatively new, be wary of lenders offering you a low amount. They could be looking for a reason to repossess your vehicle and then selling it to make a profit.
A lender will ask you for the personal information for both yourself and anyone who’ll be a co-borrower on the loan. This includes your name, address, contact information and social security number (for the credit check.) However, the lender shouldn’t ever ask you for the same information for anyone not on the loan.
For example, while many lenders will require you to provide the names and phone numbers of references, they should have no reason to ask for their social security number.
Similarly, a legitimate lender will need to check your credit report and you should be wary of any that claim otherwise. The lender will need to check the report for the following:
- How much you currently owe
- Your credit usage
- How much you’re currently paying monthly
- Delinquencies on your lines of credit
- Any accounts in collections or settled accounts
- Any open bankruptcies
A reputable lender will want to make sure you’re able to repay the loan. If the lender doesn’t need to check your credit, they’re either putting themselves at risk or they’re not concerned because they’re looking to scam you anyway.
Never pay anything upfront, whether it’s processing fees or down payments. A legitimate lender won’t charge you a fee simply for enquiring, and the last thing you want is to give the lender money and then be turned down for the loan!
Don’t ever sign your vehicle over to the lender. When you take out an auto title loan, you’re not surrendering ownership of the vehicle to the lender, they’re added to the title as a lienholder. However, this means they have a stake in the vehicle and, as such, there are a few things you should be aware of.
Firstly, while you’re still the owner, you won’t be able to sell the vehicle until the loan is repaid. Secondly, if the car is written off in an insurance claim, the lender is entitled to receive any payout first. Thirdly, if you fail to make payments on the loan, the lender has the right to repossess the vehicle and sell it to recover their losses.
Lastly, beware of balloon payments. A balloon payment is a single payment at the end of the loan that’s typically at least twice as much as your previous payments. The idea is that you pay less on your regular payments as a result, but since the remainder must be paid at the end of the loan, borrowers often get a nasty shock when the final payment is due.
While not actually illegal, the lender is required to notify you of any balloon payments that will be due at the end of the loan. Be wary of any lender that uses balloon payments; besides the large final payment itself, you may also find yourself stuck with closing costs or other additional fees.
Who Can You Trust for an Auto Title Loan?
While it might seem like there are a lot of red flags, the truth is that most lenders are trustworthy and reliable. However, if you’re looking for a loan that’s already been trusted by thousands of people like you, look no further than a ChoiceCash Auto Title Loan, serviced by LoanMart.1
A ChoiceCash Auto Title Loan has been designed to make the application process as quick and easy as possible.1 You can either call 855-422-7402 toll-free or visit choicecash.com. After providing some basic information about yourself and your vehicle, you could find out in minutes if you’ve been pre-approved and how much you could borrow.1
Your loan specialist will then explain the next steps. Unlike some other lenders, a credit and vehicle check is required, but these shouldn’t be cause for alarm. The credit check is primarily used to look for active bankruptcies, and since you’re using your vehicle as collateral, your score is not a major factor in the approval process.
This means that even if your credit is less than perfect, you could still be approved for the money you need.
Similarly, while your car will need to be valued, you won’t be required to drive anywhere for an inspection. You can simply submit photos of your vehicle and the loan specialist will then review them for signs of major damage. Minor damage, such as small dents and scratches, shouldn’t be a problem.
More than this, you can be assured of getting a fair loan offer – and you’ll never be asked for a down payment or asked to sign the vehicle over to anyone else.
Lastly, although you’ll need to provide the names and phone numbers of references, they’re only contacted if you can’t be reached. They’ll never be called during the application process, so your privacy is assured.
What Are Some of the Benefits of a ChoiceCash Auto Title Loan?
Besides an easy approval process and your money in 24 hours or less, you could enjoy additional benefits, even after your loan’s been funded.1
With other lenders, once you’ve received and used your money, you’re left with making monthly payments until the loan has been repaid. A ChoiceCash Auto Title Loan, serviced by LoanMart, works differently.
When you make your regular payments on-time, the annual interest rate for your loan can be reduced.2 When that happens, your payments are reduced too, allowing you to save a little more money every month.2
In fact, you could see your payments reduced by nearly half over the lifetime of the loan, with no balloon payments or additional fees or penalties due at the end of the loan.2 Similarly, there are no pre-payment penalties if you pay the loan off early.
If you need additional funds in the future, you could also qualify to borrow more at a later date. Best of all, you wouldn’t need to start all over again with your interest rate, as you’d be able to keep the same low rate you’ve worked hard for.1
Don’t risk being taken for a ride with the other auto title loan lenders. Call 855-422-7402 toll-free or visit choicecash.com to get started. There’s no application fee and you could be holding your cash in your hand today!1