What are Title Loans?
If you’ve ever been strapped for money and have worried that your credit wasn’t good enough to get you a loan, you may have considered a car title loan. Car title loans don’t rely on credit scores to determine a person’s likelihood of repaying a loan; in fact, the lenders of these loans don’t check credit reports at all, a feature that makes these loans very attractive to many borrowers.
Instead of credit checks, title lenders hold the clean and clear titles to cars people own outright as collateral to secure the loans. If you don’t pay your loan, you agree to surrender your vehicle to the lender, who in turn will sell it to pay off your loan and all associated fees. This is the least ideal outcome and most lenders aren’t interested in taking this step. Title lenders prefer working out new repayment plans with their customers instead of resorting to repossession, which is a costly and time-consuming process. According to the State of Delaware, even if a lender is eventually forced to repossess your vehicle and sell it, any surplus funds will be paid to you, the original owner of the car.
Delaware Title Loan Requirements
Title loans are easy to obtain, provided you own a vehicle that has a title in your own name. The application process is much shorter and less-involved than a bank loan application. Most borrowers are able to apply for a loan and get the money in the same business day. Lenders need basic information to complete your application, such as:
- a copy of your photo id
- proof of your address
- proof of income
- proof of car registration
- the original title
According to this article, Delaware lenders may also ask for a copy of your ignition key. Delaware lenders are able to loan money on more than just cars. Trucks, motorcycles, boats, RVs, campers and commercial vehicles are all eligible.
In many cases, you can start the application online. Once you initiate it, a representative will call to guide you through the process. Ultimately, you will need to visit a storefront in Delaware to let a loan specialist inspect your vehicle, to give them your car title and to pick up the loan check.
One of the most surprising aspects of car title loans is that you don’t need to have a job to get one. All you need is some form of income, like disability benefits, child support or alimony. As long as the income you have will cover your normal expenses plus your loan payments, you can get a title loan in Delaware.
Title Loan Interest Rates in Delaware
Delaware sets no cap on how much interest a car title lender can charge. However, according to CNN, title lenders in Delaware typically charge a 25% interest rate. If you borrow $1,000 for example, you’ll have to pay back $1,250 by the end of your loan period. While this interest rate is slightly higher than what’s typical of a bank loan or credit card, it’s a standard rate for a no-credit-check loan. Because car title lenders are taking a greater risk by granting loans to people without a credit check and without making employment a requirement, they recoup it in interest rates.