What is a car title loan? Well, it is just how it sounds. You offer up your title as collateral for a loan from a lender. There are many different types of these. For example, a traditional lender such as a bank or finance company may take your title as collateral. However, there are also specific car title loan companies available as well. In this article, we will focus on companies that specialize in this area.
Why Would I Get a Car Title Loan?
Well, there may be many reasons that you would want to use your car title for this purpose. For example, maybe you have some bills that really need to be caught up. On the other hand, perhaps you simply need some extra cash to make it through to the next payday. Maybe you have an emergency that makes quick cash necessary. Either way it goes, this gives you the ability to make use of your assets and get cash when you need it.
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How Does A Car Title Loan Work?
The way this works generally depends on what type of company you use. In many cases, especially today, you can get a loan on your title and still keep your car. However, in some cases, the lender may require that they keep possession of the vehicle until the loan has been repaid.
You would take the car and your title together to the potential lender. They would look up your car by year, make, and model, and then determine what the resale value of the car might be. They will also then look at the actual car to determine its condition. In general, you might qualify for a loan up to fifty percent of the total resale value of the car.
Upon receiving the funds, you either will be required to make a lump sum payment or may be able to make payments upon the interest, if you cannot make a full payment. There are interest rates charged on this type of loan and generally, it is somewhere close to 300% interest.
What are The Advantages To A Car Title Loan?
Some advantages of this approach include:
Cash when you need it Does not rely heavily on your credit You can use the cash in any way you see fit A relatively small loan, which is easier to pay back
What Are Some Of The Disadvantages of A Car Title Loan?
Some disadvantages to this type of thing include:
Higher interest rates Higher fees If you default, you lose your car Title must be in your possession and free from any liens
Overall, if you are having troubles finding a loan anywhere else, have bad credit, but need cash fast for any reason, a car title loan may be your answer. However, you need to make sure that you have a free and clear title, in your possession, and you have the ability to repay, or risk losing your vehicle. If you need money quickly, a Payday Loan might be a better option for you, which can also provide funds quickly and usually without credit checks.
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