A Quick Guide to Car Registration Loans

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A huge 37% of us don't have enough to cover a $1000 emergency bill. From emergency bills to switching jobs, we've all had a cashflow problem from time to time. 

If you need some money before your next payday, car registration loans could be the solution.

But how do they work and what do you have to do to get one?

This quick guide makes it easy for you to decide if a registration loan suits your financial needs.

Get Cash From Your Vehicle Without Selling It

When you're short of money, it's tempting to look at assets you can sell. Selling your belongings liquidates assets into cash fast - but you need to think about the long-term impact of getting rid of what you're selling.

Are you only going to have to buy the item back again in the future? Selling anything you're likely to need isn't an economical way to get yourself out of a short-term cashflow problem.

For example, if you use your vehicle to get to work, selling it isn't an option. Without transport, you can't work, so you won't be able to earn the long-term bill-paying wages you need.

Registration loans mean you can unlock the cash from your vehicle without selling it. You simply borrow money against the value of the car and then pay this amount back in with interest on the due date.

Car Registration Loans vs Title Loans

A car registration loan is similar to, but not the same as, a title loan.

The first significant difference is that only residents in Arizona can apply for a registration loan. The system isn't set up in any other state.

A registration loan acts more like a short-term payday loan than a longer-term personal loan against a vehicle's title. This means the amount you can borrow is typically much less than you could get for a title loan.

Unlike a title loan that's paid in installments, a registration loan must be paid in full on the agreed due date.

If you're paying off your car with an auto loan, the title won't be in your name. This means you can't apply for a title loan at all - but you can still apply for a registration loan.

Finally, a title loan requires the vehicle title to be signed over to the loan provider. If your loan isn't paid up, they then have the right to take your vehicle. A registration loan lets you keep the title in your name and the car cannot be repossessed if you don't pay the final amount due.

An important point to note is that a registration loan does not classify as a payday loan in Arizona. This means the interest cap on payday loans does not apply, and you may see higher interest rates charged on registration loans than other loan products.

How to Get a Registration Loan

Do you think a registration loan suits your short-term financial need? Here's what you need to do to get a short-term cash loan in Arizona.

1. Check Your Registration Documents

Make sure you are the person named on your vehicle's registration. Without this, you won't be able to get a registration loan.

You'll also need a valid Arizona driver's license, your Social Security number, and proof of income.

You won't need to provide a ton of evidence for a thorough credit check, a household budget, or information about other loans or debts you currently owe. This is why registration loans are popular: it's easy to release quick cash without jumping through too many hoops.

2. Find a Lender

Like any financial product, there are charlatans out there. There aren't many, of course, but there are things you can do to make sure you're borrowing from a respectable lender.

Check third-party review websites like FeeFoo or Trustpilot to read real-life customer testimonials. Unlike reviews on a company's website, which anyone can add, these reviews come from real customers to give you a clear idea of the company's reputation.

Find the small print on a lender's website or paperwork, too. Read it carefully, including comparing interest rates with other lenders to find out if they offer a fair loan deal. 

3. Complete the Application Form 

Take time to complete the application form online or at the lender's branch. Read it thoroughly and make sure you're happy with the terms stated on the form. 

Check the details of your maximum loan amount, the due date, and the interest rate. If you're not sure about anything on the form, ask the lender to explain it before you apply. 

4. Await Approval

After completing your registration loan application, your lender will soon contact you. They'll let you know if you've been approved for the loan, how much you are entitled to borrow, and the payment terms.

If you're happy with everything in the agreement, you can confirm this verbally on the phone, in writing via the website, or in person at a branch. Any of these confirmation methods make the contract binding.

5. Receive Cash Fast

Registration loans release the money to you fast. Once your agreement is confirmed, the lender will transfer the cash to your bank account usually within a few hours.

At the latest, you'll receive your money the next business day. There's no waiting around for approval of funds like a traditional bank loan!

Solve Your Short-Term Debt with Long-Term Strategies

Car registration loans are suitable if you can afford the repayment amount, on the due date, and if you need short-term cash injection such as for an emergency bill.

However, these auto loans are not a long-term solution and if you can't meet the requirements above it's likely you need a more comprehensive debt and financial management plan.

If you're often applying for credit, finding yourself short at the end of every month, or struggling to pay bills, it's time to look at your overall finances. Take a look around our money blog for hundreds of tips to help you create a manageable way to pay off your debts and find financial freedom.

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