What is a car title loan? This type of loan involves giving up your vehicle title as collateralto get loan from a lender. There are different types of lenders out there that offer car title loans. A traditional lender such as a credit union or bank may take your title as collateral. But, there are also specific car title loan firms available as well. In this article, we’ll focus on companies that specialize in this area.
A title loan is one of the easiest ways to get quick money which is usually within 24-48 hours, without your credit rating since this loan does not look into these matters. The loan amount is less than the value of the property and it qualifies you to get about 30-50% of the original amount of the title of the property.
This type of loan is short-term and has a repayment period which is less than 60 days. It also tends to have higher interest rates compared to other loans. The interest rate varies from lender to lender and can range between 100-350%. Therefore, it’s important for you to repay the loan amount within the given period so as to recover your title and to avoid unnecessary legal processes.
Why Would I Get a Car Title Loan?
There are many things you may want to use your car title loan for. Maybe you need some extra cash to make it through to the next paydayor you have some bills that need to be paid. Maybe you have an emergency that requires quick cash. Either way, car title loans provides you the ability to make use of your vehicle and get cash when you need it.
How Does A Car Title Loan Work?
The way this works depends on the type of company you use. In some cases, you can get a loan on your title and still keep your car. But, the lender may also requireto keep possession of the vehicle until the borrower repays the loan.
You would take the vehicle and the title to the lender. They would look up your car by year, and model to determine the resale value of the vehicle. They will also look at the actual vehicle to determine its condition. You might qualify for a loan up to 50 percent of the total resale value of the car.
After you receive the funds, you’ll be required to make a lump sum payment or may be able to make payments upon the interest, if you can’t make a full payment. There is an interest rate that is charged on this type of loan and it’s close to 300 percent.
Advantages of Car Title Loan
- Does not rely heavily on your credit.
- Cash when you need it.
- It is easier to pay back.
- You can use the cash in any way you like.
Disadvantages of a Car Title Loan
- Higher fees.
- Higher interest rates.
- The title must be in your possession and free from any liens.
- If you default, you lose your vehicle.
In conclusion, if you’re having difficulties in finding a loan anywhere else or you’ve bad credit, but need quick cash, a car title loan may be your answer. But, you need to ensure that you have a clear and free title in your possession. You must also have the ability to repay or risk losing your vehicle. If you need quick cash, you can get funds through car title loans.