Do you need some cash to keep you afloat until your next paycheck? Or maybe you encountered an unexpected financial emergency and need cash as soon as possible to resolve it. When you need cash fast, an auto title loan can be an option, even if you don’t have good credit. All you need is a car with a clean title (and in some cases, proof of auto insurance.)
The value of the car is used as collateral for the loan. But you can still use the car as you pay back the loan. In most cases, you can apply and be approved for an auto title loan in less than a half hour.
When considering an auto title loan, two of the most important things to understand are the interest rates and payment terms. You can use this as a basis for comparing different auto title loans and finding the one that best meets your needs.
Additionally, you will need to meet these requirements as set out by your contract, so it’s important that you understand them. Missing a payment (or making an incomplete payment) can be considered a default on your loan, and this means that the auto title loan company has the right to repossess the car (although in many cases the company is willing to work with you in order to prevent that outcome).
Interest Rates for Auto Title Loans in Arizona
Arizona state law (per 44-291(G) ARS ) regulates how much interest an auto title loan company can charge you for a loan. In some cases, you may be able to find a company that charges a lower interest rate than those set out by the state, so it can be a good idea to shop around and see what your options are. But don’t be too quick to sign on for a lower interest rate – make sure you understand all the requirements involved so you get the best loan for your specific situation.
The maximum monthly finance rate you can be charged for an auto loan of $500 or less is 17%. For a loan between $500 and $2,500, the maximum monthly interest rate changes to 15%. Loans between $2,500 and $5,000 must not exceed an interest rate of 13%. And for all loans higher than $5,000, the maximum monthly interest rate is 10%.
Payment Terms for Arizona Car Title Loans
In most cases with auto title loans, the payments may include the interest only. This is why they can seem very low. However, once the loan term is over, you will be required to pay back the entire principal at once. The principle is the amount that the loan was taken out for originally. This is not always the case. Some auto title loans include the loan repayment and the interest on the payments, so you want to find out what the terms are for your loan before you sign. It depends on your financial situation which option is best for you.
Additionally, most companies offer various options for how often the loan needs to be repaid: weekly, bi-weekly, or monthly. And there will be different cut-off times and other requirements set by each company. These cut-off times cannot be earlier than 5 pm on the payment due date. You will likely be required to make the payment in U.S. dollars.
Additionally, the company can stipulate other requirements, such as:
- Checks or money orders must be sent by mail
- Specifying a specific address for payment receipt
- Requiring you to appear in person for credit card payments
Understanding the rules of the specific auto title loan company you are using is important to ensure that you get payments in on time and do not become in default on your loan.
If you are late with a payment or do not pay the total amount owed, then you can face consequences as set out in the payment terms. For example, you may incur late fees or more interest charges. By Arizona law, you cannot be charged more than 5% of the unpaid balance as a penalty. Also, these penalties must be clearly disclosed in your contract.
Even worse, the auto title loan company has the right to repossess your car if you default on the loan. By law, you have until 11 days after the payment due date to pay back the loan if you missed a payment. However, many auto title loan companies are willing to work with you if you encounter an unexpected setback.
When you are signing for your loan, you have the right to request that the lender provide you with the payment due dates and amounts in writing. This can be helpful to get to ensure you don’t miss a payment. It is also a good idea to talk to the auto title loan company about what help they typically offer to borrowers who face an emergency situation and need a little extra help.