A motor vehicle title loan is a type of title loan where the borrower pledges a vehicle they have recently bought as collateral for the loan. The borrower is required to pay the interest and principal only when it is due; otherwise, he or she has the option to ask for refinancing and get more money borrowed. Auto Title loans are usually given for 3-year terms and are regulated by many state and federal laws.
In a motor vehicle title loan, the borrower pledges an automobile they have recently bought as collateral for the loan. The borrower is required to pay the interest and principal only when it is due; otherwise, he or she has the option to ask for refinancing and get more money borrowed. Auto Title loans are usually given for 3-year terms and are regulated by many state and federal laws.
The loan amount is usually 80% of the vehicle’s value and is usually for a 3-year term. Auto Title loans have efficient amortization and loan pay-down features. Rarely, the loan’s principal can be paid down early if there is a bundled payment at the end of the loan term.
How do motorcycle title loans work?
The borrower completes the application form, which contains information about the loan. These forms can be filled up online, but they must be signed in physical presence at the lending institution. Based on the information received and verified, the lender approves or rejects the application (thus ensuring that the borrower is a genuine customer.) The paperwork is prepared, and both parties are clear about all commitments. Usually, funds are electronically transferred through credit cards or checks to the borrowing bank account.
Once this is done, the borrower signs a promissory note stating that they will repay the loan at a specific “repayment date.” The lender also issues documents (called matriculation papers) specifying the vehicle brand and model, the loan amount, interest rate, maturity period, and the repayment schedule. The borrower then takes these papers to the dealer/agent who will transfer the vehicle’s title from the seller to himself/herself by-way-of endorsement. This process is called “matriculation.” The following is a conversation with an auto loan expert
What are the documents required to apply for a motorcycle title loans?
Some of the other common documents required before signing for the loan include:
- proof of income (most all lenders have several options for providing this),
- a valid driver’s license,
- residency proof,
- two passport-sized photographs
- some utility bills verification/confirmation.
Additionally, most lenders ask borrowers to get credit reports from three agencies before the loan is granted. Since none of these documents are specified by regulation, you can send in any documents you like since all that counts is that the lender can verify your creditworthiness. These days, most lenders accept information and documents uploaded online from email addresses such as yahoo mail or Gmail.
Risks of motorcycle title loans
As always, the biggest risk for such a loan is defaulting on your loan obligations. Under federal law, since the vehicle is being used as collateral, the borrower will lose ownership of the vehicle if it is not paid off after maturity. Additionally, while getting a motorcycle title loans, you may also be asked for UCC-1 statements (Uniform Commercial Code 1). These are personal financial documents that specify the amount both parties have invested in the asset(s) secured by this type of title and other details of its purchase. If you are unable to produce them, you will not be eligible for such a loan. The following is a conversation with an auto loan expert.
Benefits of a motorcycle title loans
If you are handy with a wrench or know how to fix cars, motorcycles, and scooters, then a motorcycle title loans will allow you to fix the vehicle and keep it longer. All you need is for it to run fast enough to get a loan.