How Does a Car Title Loan Work In Arizona
There are various types of loans available in the financial market ranging from simple personal loans to collateral loans. It takes time to process those loans, and you also need to have a good credit score to be eligible for specific loans. However, when you need a loan in a short amount of time, or you have bad credit, you may need to say to yourself, “Should I start looking for Phoenix title loans near me?” The structure of the loan is as simple as it gets. You pledge the title and get a loan against the car value. Let me explain it further.
Step 1: Application
There are various lenders available in the market. You can personally visit your local lenders or apply online which takes less than a minute. All it requires is that you to fill some personal details and the amount of loan needed. You also need to provide the details of your car. The online lenders will provide you with an automatic response with regards to your application.
Step 2: Accept/Deny the Loan
The lenders, either the local ones or the more traditional ones will scrutinize your loan application especially the value of car perceived by the market. If you qualify for the loan, you will be called upon to complete the required formalities.
Step 3: Processing the Loan
The eligibility of loan amount will depend upon the value of the car. It is always less the full value of your vehicle. The amount of loan will also differ from lender to lender. The lenders usually need to inspect the car and will base their judgment on the latest valuation of the vehicle made recently. The time required depends upon the process of the lender. It varies from 30 minutes to one-day maximum depending on how lenders process the loan. Various lenders complete the process within a few hours, and you are good to go.
Step 4: Title Handover
If the lender is satisfied with the loan application and valuation of the car, then the borrower hands over the title of the car to the lender. If you don’t have the title because it’s not paid off, you could consider registration loans in Phoenix. Both the lender and borrower enter into a Car Title Loan Contract which would be binding on both parties. The terms and conditions are mentioned in this contract, and the borrower must pay the required amount within the prescribed time. Failure to comply with the payment of loan will lead the lender to revisit their rights and repossess the car to recover the loan amount.
Nature of Car Title Loans
Car Title Loans are short-term loans ranging from a few weeks to a few months. These are emergency loans for difficult circumstances. You can always roll over the loan by a few days/weeks depending on your relationship with lender/contract. In some states, a rollover is very costly. The rate cap of rollover is 17% per month in Arizona. It is considerably less than in other states.
The most important reason behind these higher rates is that the lenders do not run credit checks and do not require income proofs but just a title of the car. They also need to ensure the margin of profits against the odds of default and nature of the business.
Arizona Laws Concerning Car Title Loans
Arizona is one of the few states which has imposed a cap on the interest rates. For a loan under $500, the maximum interest rate is 17% per month; the lender can charge the borrowers. It is better in comparison to other states. The monthly interest rates on loans between $500 and $2,500 are capped at 15 percent, and anything over $5,000 is capped at 10 percent.
In the State of Arizona, the lender needs to have a court order before they proceed to repossess the car. So, if the borrower defaults on the loan and is sure of non-payment, he is advised to take all the personal belongings from the vehicle. The lenders need to show the court order to the borrower and take the car immediately. The repossessed car needs to be sold in “commercially reasonable manner” as per State Laws. The regular methods are a public auction or private sale. The proceeds will meet the outstanding amount of loan plus any expenses incurred.