Taking an auto title loan in Utah should be easy and helpful for vehicle owners. Borrowers shouldn’t be asked for unreasonable requirements nor be offered with outrageous rates that are beyond the set cap rate by the state.
What is the Cap Rate?
A cap rate is the “maximum allowable charges on loans”. In US, there are states that set cost limits on this type of loan while others don’t. Lenders in some states where there is no cap set can charge both interest and fees.
Aside from Utah, other states that have no interest cap rate are Delaware, Idaho, Illinois, Missouri, Nevada, New Mexico, South Dakota, and Wisconsin. Given this lack of interest cap rate, how can borrowers from said states protect themselves from overcharging?
What Works for You, Not the Car
One way for borrowers to get affordable loan rates is to look for lenders that structure terms and conditions based on borrower’s income and expenses, not on the value of car alone. Even if it is easier for borrowers to be asked for car title only, in the long run it will prove more helpful if lenders care to consider as well the borrower’s source of income and recurring expenses.
Borrowers should also be wary about excessively long repayment periods. Six months should be enough for a $500 loan, and one year for a $1000. Better yet, borrowers must look for lenders that provide a flexible formula to get a favorable repayment cost and period depending on size of loan and income. Lenders that spread loan costs equally over the duration of the loan can also prove helpful. As PEW Charitable Trusts recommends, “Any fees should be incurred evenly over the life of the loan”.
State Laws on Title Loans
Consumer Federation of America also publishes report on US state law in title loan, such as in Utah. It lists US states with information on following categories: Maximum Loan, Cost Limits, Fees, Cost $500, Lease Back, Repossession Terms, Right to Cure, Surplus/Deficiency, Prohibited Practices, and so on. The report is a good introduction to information that any person interested in this type of loan should know.
Lenders of auto title loan in Utah are not subject to the state law cost limits (as there are none) but responsible and helpful ones tailor terms in such a way that benefit both the lender and the borrower. Borrowers can always try negotiating with those above mentioned tips in mind, if all they find offer standard rates.