A title loan is a loan that you receive by using your car as collateral. The majority of loans that you can receive from a loan company will have some type of collateral or they may be unsecured. An unsecured loan will carry a higher amount of interest.
What is Unique About a Title Loan?
Even though a title loan is not unsecured, it is a loan that generally has high interest. Title loans are not legal in every state, but they are legal in the state of Wisconsin.
Since that is the case, you are able to go to a title loan company and get a loan in exchange for your title as long as your vehicle is acceptable to the loan company.
What Are the Requirements for a Vehicle in Order To Receive a Title Loan?
The requirements for your vehicle may vary; this depends on the Wisconsin title loan company. Before giving the loan, the company will do an inspection of your vehicle. You must present them with your government issued ID, and you also have to be able to prove that you are the current owner of the vehicle.
Most title loan companies in Wisconsin will only accept your vehicle if it is not past a certain number of years. After the company determines that you are eligible for a loan, it will take the title to your vehicle and and grant you the loan.
Information on Wisconsin Title Loan Laws
Wisconsin title loan laws put few restrictions on the title loan company.
These loans were not always legal because heads in the state government found that, quite often, title loans have extremely high interest rates, and these loans kept Wisconsin residents bogged down with debt.
Now that title loans are legal in Wisconsin, lending companies have to follow few guidelines.
Fees and Restrictions
When it comes to the amount that a company can charge for a title loan, the in the state of Wisconsin, it is $25,000 or up to 50% of the vehicle’s value.
The term of a title loan does have a limit. This is a limit of six months. When the limit of the title loan is reached, the borrower must pay the balance of the loan.
If the borrower is not able to pay for the remainder of the loan, then she can get an extension of the loan and she will pay high interest charges.
How Much to Expect to Pay for a Title Loan in Wisconsin
In the state of Wisconsin, there is no limit to the amount of interest that can be put on your title loan. That means that the lending company can charge you an extremely high amount if they so desire.
This lack of interest rate limit is one of the main reasons why several states have decided to do away with the title loan. Generally, loan companies put their interest rates at 25%. Other companies have been known to give an interest rate of about 30%.
This is an extremely high amount considering that unsecured loans from the bank generally have lower interest.
What Happens If Default on your Title Loan
A title loan is a secured loan, so if you default on your payment, the loan company does have the right to repossess your car.
After your car is repossessed, the loan company may resell it. In the state of Wisconsin, you do have a little bit of assistance in this regard. According to Wisconsin repossession laws, a loan company will have to give you 20 days before repossessing your car.
This can give you a little bit more time to make your payments before your vehicle gets repossessed.
Is a Title Loan for You
If you are an individual who lives in the state of Wisconsin and you are considering getting a title loan, you do well to consider the positives and negatives of this option.
If you have no other choice but to get a title loan, then make sure that you get one that has a good reputation; also, shop around in order to find the best interest rate for your loan.