Title Loans in Georgia: Everything You Need to Know
Are you facing emergencies without any other option? You might benefit from a car title loan in Georgia and get the cash you need on the same day.
But although it's a faster way to borrow money than traditional financial institutions, there's a lot to consider and watch out for if you don't want to get stuck in a cycle of debt.
Here's everything you need to know.
What Are Car Title Loans?
Title loans have different names–car title loans, title pawns, pink slip loans, etc. But they all pertain to the same thing.
It's when you apply for a loan and set up a motor vehicle you own as collateral. The word "vehicle" could pertain to a car or motorcycle, as long as the title is under your name.
If you fail to repay your balance, the lender will obtain the right to repossess your car. In easier words, you'll lose your car or vehicle.
It works similarly to many secured loans and other property collateral such as lots, houses, and other assets.
How Do Title Loans in Georgia Work?
Different lenders will have varying processes. But here's the general gist of how a title loan works in Georgia.
Look for a Title Loan Lender in Georgia
Like many new loans, several lenders are now emerging in the market. This can pose as an advantage or disadvantage to a borrower like you.
It can be advantageous since you'll have more options. You can compare the loan terms, interest rates, and costs.
However, multiple options can also overwhelm you. There might even be a chance of stumbling upon predatory lenders who only want to take advantage of you.
That said, research is crucial at this stage. Go for a trustworthy lender recommended by peers or those with accreditation and good reviews.
Apply for a Car Title Loan
After settling for a lender, start the process by applying. Storefront lenders will probably have physical copies you can conveniently fill out on the spot.
If you're working through a website, there's likely an online form you can quickly fill out. They'll ask for your personal information, contact details, address, loan amount, etc.
Submit the Required Documents
Part of the application process is the submission of requirements. They'll ask for documents proving your eligibility to apply for the loan.
They may also ask for additional information about you. Discern if it's safe to give out those details or if it's a security threat (i.e., bank account details vs. PIN). If it's the latter, feel free to decline.
Below are some general requirements to prepare for a title loan in Georgia:
- Valid I.D.
- Motor Vehicle Title
- Motor Vehicle or Car Details (insurance, car titles, etc.)
- Bank Account and Financial Details
- Proof of Income and Employment
Valid I.D. or Driver's License
As with many application processes, I.D.s are always crucial for verification. It can be a driver's license or any government-issued I.D.
To qualify for a title loan, you must be a legal Georgia resident above 18 years old. Your I.D. is one way to prove that.
Motor Vehicle Details or Car Titles
Of course, the star of the show is your car title. The motor vehicle must belong to you – you can't set up somebody else's car as collateral.
Provide all the documents regarding your motor vehicle, such as the car insurance, clear title, pictures, etc. It will go through a motor vehicle evaluation.
The condition of your car or motor vehicle (i.e., mileage, manufacturing date, value, etc.) will also dictate how much cash you can get and determine your loan terms.
Your lender will likely ask for your bank details. It's where they'll deposit the money and deduct your repayment.
Again, each lender will have varying processes, but this is one of the standard and efficient ways. Some also utilize a cash-only basis.
Other lenders will conduct a soft credit check to see your background, although they're not as strict as traditional institutions.
But be wary. Poor credit history can spike your interest rate, and predatory lenders may take the opportunity to ensure the repossession and sell the motor vehicle for their profit.
Proof of Income (Showing Ability to Repay)
Your lender will want to check your ability to repay them. After all, a loan service is also a business for them – they need to secure profit generation.
You'll be asked to present proof of income and employment.
In some instances, your lender may want to request references. It's usually for those with bad credit.
They'll contact the person(s) you listed down to learn more about you and assess if you're a worthy client.
Sign the Title Loan Contract After Reading it Thoroughly
Most title loans have a fast loan approval system. Some borrowers can obtain the money within the same business day in Georgia.
However, don't forget the most vital step of all – contract signing. Many people are adamant about the fast cash that they don't read through the contracts correctly.
Remember that this legal document is powerful. Avoid signing into agreements you know nothing about.
Check the terms they've laid down, such as the interest rate, duration, specified maturity date, the inclusion of certain fees, payment deadline, etc.
See if they work for you before you affix your signature.
Repay the Title Loan Amount and Other Fees
After which, ensure that you complete your monthly payments. Note that your balance will also include other fees subject to the lender's discretion.
Examples of these are service and handling fees. On top of these will be the interest rates, annual percentage rates, etc.
While there are no specific title loan laws, the state regulations urge that all of these details must be in writing. Your car title loan lender should transparently present these to you.
This brings us back to the step above – reading through your contract is crucial.
Should I Get Title Loans in Georgia? [Pros and Cons]
As great as title loans sound, there are pros and cons to consider. There's a reason why title loans stir up cash controversies!
Title Loan Pros
- Fash Cash. Obtaining the money on the same day is possible, depending on the lender. The process is more efficient than traditional banks and lenders.
- Drive Your Motor Vehicle. You can still drive your car during the loan term. Your lender cares more about the clear title (ownership) than the vehicle itself.
- Skip the Discrimination. If you have bad credit, applying for loans is impossible. You can avoid strict credit checks with title loans (but with repercussions).
- Reasonable Terms. The rate packages are appropriate considering the situation. Many credit types are also accepted.
Title Loan Cons
- Very Expensive. The accumulated cost of title pawns will shock you.
- Motor Vehicle Repossession is Highly Likely
- Prone to Predatory Lender
What to Watch Out For in Getting Title Loans in Georgia
Let's expound more on the cons in this section.
Don't get us wrong. We think car title loans are reasonable options for emergency cash. But a title loan is not for everyone. For some, the "catch" will send them into a cycle of debt.
We've been talking about predators, but who are they? They're the ones who know that title loan borrowers are people with financial struggles.
Since it's difficult for a struggling person to apply to banks, they have few options. This is where predators swoop in.
Their title loan conditions are unreasonable and impossible. For instance, they often set high monthly interest rates.
To set things into perspective, imagine the annual interest of banks. We often complain about the 25% interest rate at the end of the year. Imagine having to pay as much every month!
These predators know that it's impossible to pay off such vast amounts in a short time, with the goal of obtaining the motor vehicle which they can sell afterward for a good value.
But this isn't to say that all title pawns are predatory. Many lender options genuinely help clients with title loans in Georgia.
Bad Credit Repercussions
Many car title loan companies claim that they don't conduct credit checks. While true, it doesn't mean you won't encounter consequences.
Someone with bad credit may have the following drawbacks.
1) High-Interest Rate
A title loan lender would ensure he won't be short-changed in this business. Poor credit poses the risk of your inability to pay.
A high-interest rate would increase his loan proceeds, securing the profit early on should you fail to repay in the following months. Additionally, it's also a good chance for repossession.
Although not as strict as California, Georgia has loan regulations that the maximum interest rate for the first three (3) months is 25% and 12.5% after that.
2) Poor Title Loan Terms
The lender may also subject you to poor arrangements. Although they approved your application, you'll struggle with the monthly payments.
Examples of bad terms are short payment deadlines and higher monthly amounts. Another case may be a limited maximum loan amount or a high minimum loan amount.
Either you can't borrow a large amount of money (you can't get the cash you need), or you need to borrow a lot of money first. Both situations can put you in a tough spot.
3) Low Loan AMOUNTS
The lender may also give you loan money below the actual car value. In short, you're risking the car but not maximizing the actual value of the motor vehicle – that's a loss for you.
Since they're afraid you can't complete the payment, they'll lend you a lower amount to minimize their potential losses.
Title Loans are Expensive
It's ironic, but a title loan option is more expensive in the long run. If you accumulate the total payment, you'll realize that you shelled out a lot of cash in a short period.
Loans are generally expensive; think of them as payments for urgency. Title loans are here to the rescue if you need the extra money fast, but you 'pay for it' during the repayment period.
The monthly fees may even cost more than the income you're bringing in. That's why title loans should be reserved for genuine emergencies only.
There are Hidden Fees
Though not all, some title loan companies don't disclose all possible charges at once. It'll be helpful if you clarify with them before making decisions.
For instance, they may allow deadline extensions for your title loan. However, those extensions may constitute a fee. If you continuously miss deadlines, your balance might surprise you.
These should be disclosed in your contract. Again, reading through the legal documents will help you a lot in the long run.
Be Ready for Motor Vehicle Repossession
We're not saying that your motor vehicle will surely be repossessed when you apply for a title loan in Georgia.
We're telling you to prepare for the worst. Title loans, as with other loan types, are risks. The fact that you've set up the motor vehicle as collateral already implies that.
If you're not ready to "sell" or give up on your motor vehicle, it's best to go for other loan alternatives.
Loan Alternatives in Georgia
Hesitating about a title loan? Perhaps you want to consider other options that won't mean losing your vehicle.
We know. It's awkward to borrow cash from friends and relatives. It may even cause quarrels and disputes.
But if possible, peer-to-peer lending is the best option with little to no risks. You don't have interest rates or deadlines to worry about.
Other loan types in Georgia don't require setting up assets like your vehicle or property. They work similarly to title loans, minus the vehicle.
These loan types are also rampant online. You can explore website options to check them out.
Short-term loans allow you to borrow cash for any purpose. You can request small to medium-range amounts, which last from 6 months to a year.
When Should You Get a Car Title Loan in Georgia?
Title loans are only worth it for emergencies such as medical expenses, bail, or critical situations. The urgency must outweigh the expensive cost of title loans.
Avoid losing your motor vehicle for non-essentials like luxury items or vacations; it is not wise. There are other low-risk ways to earn cash for these.
Title Loans in Georgia: Frequently Asked Questions [FAQs]
Let's address some of the FAQs about title loans in Georgia.
How Much Cash Can I Get for a Title Loan in Georgia?
You can get $200 to $50,000 when you apply for title loans in Georgia. It depends on the condition and model of your vehicle.
Some title loan companies lend 25%-50% of the vehicle value. It also depends on their system and how they work.
Do Title Loans Affect Your Credit?
No, title loans don't affect your credit. They have little effect, which can be both good and bad news.
It's great for those with poor credit. It won't impact your history even if you underperform with your title loan.
But title loans aren't the answer for those looking to improve their scores.
How Do You Get Out of Title Pawns in Georgia?
The only way to get out of title loans is to pay them off as soon as possible. The longer you extend, the more you'll have to pay. Don't default!
If you're struggling, you can opt for refinancing. It's basically another loan (from another lender) to pay off this debt. It isn't the best choice, but it may be the only plausible one in this case.
Title loans aren't as intimidating as long as you understand the basics. We hope this article helped you expand your knowledge. Good luck!