For Illinois residents who need to get fast cash, a title loan can be the perfect solution. Frequently, borrowers do not have access to other types of financing like bank loans, credit cards, or family members who can lend them much needed cash.
Until April 1st, 2009, title loans were only regulated if they were less than 60 days in term. Therefore, all transactions were made for terms longer than 60 days. In April 2009, new rules were enacted that cover all title loans. The laws set forth by the Illinois Administrative Code Title 38 currently regulate title loans.
A title loan is a short-term loan where the lender temporarily takes the title of an asset. The title secures the loan and acts as a form of collateral, and the use of a personal item allows the borrower to bypass the need for a credit check. In essence, the title acts as a substitute for a credit check.
A lender has a tangible security measure and is confident that the borrower will repay the loan in a timely manner. It is important to emphasize that these loans are not designed to be a long-term financial solution. In fact, most payment periods average about 60 days. Under Illinois law, title loans cannot exceed $4,000 or up to 50% of the borrower's monthly income.
As a result, most borrowers use this option when they need to address a time-sensitive situation; common examples thereof include an unexpected trip to visit an ailing family member or a medical emergency. Residents can apply, receive their money within as little as 24 hours, and pick up their check from a convenient lending location.
A title loan can be obtained by using a variety of personal assets. The most common involves the title of an automobile. A car title loan is an attractive option for many people throughout the Land of Lincoln because the borrower is able to use his or her vehicle throughout the entire process. An individual's freedom of mobility is never jeopardized due to this specific borrowing arrangement.
There are some basic facts that every Illinois resident should know about title loans. The first is that interest rates can legally climb to dangerously high levels. In fact, there is no limit to the amount of interest that a lender can charge.
Once a borrower applies, the lender must prepare a loan agreement that clearly indicates the asset used as collateral.
In regards to a car title loan, the following vehicle information is recorded:
The lender is also required to take possession of the title. It will be promptly returned to its owner once the loan is paid in full. In addition, a borrower must present proof of income in order to obtain a loan. This is usually in the form of recent pay stubs. In Illinois, lenders are not allowed to take the keys to the vehicle during the loan period or permitted to make any copies.
Loans are typically paid off in monthly installments. In fact, all title loans must be repayable in equal payments for the borrower. If the borrower is unable to make the payments on time, he or she has the opportunity to refinance the loan. This is only permitted if at least 20 percent of the loan principle has already been paid.
As long as Illinois consumers are well informed and understand their rights, title loans can be a secure and reliable borrowing method.
For additional information regarding title loan practices in the state of Illinois, consult the following websites:
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