Securing financing to meet financial obligations can prove difficult at times. So many factors go into deciding if you’re worthy of a conventional loan. Vehicle title loans are a suitable option for borrowers looking for alternate funds.
83.5 million people took out loans this past year alone. Some long-term, some short.
The point is, people need money for different reasons. Whatever the case, a simpler option other than the standard loan process should be a viable fix.
Title loans help give you insight into the value of your car. That’s a plus if you’re strapped for cash and you have 91′ Hyundai parked in your driveway.
If you’re in dire need of financing, car title loans may be the route to go for you. Click here to learn everything you need to know about them.
How Do Car Title Loans Work?
When you pay off your vehicle, you own it and the equity in it. That’s the primary factor in title loans because you borrow against the car you have the title to.
Some lenders may still consider you, however, even if while you’re paying off a loan on the vehicle.
Your borrowing amount gets based on the equity or value of your car. These loan amounts range from $100 up to more than $5,000. Of course, more value in your vehicle means a larger loan amount.
But lenders rarely loan the exact worth of a car. This is a safeguard for ensuring they get their money back. Or else they consider repossession.
The interest rates run high on these loans. Anticipate a three-digit interest rate. Remember this is unconventional. Higher interest rates are typical on title loans.
In short, your car is collateral for the loan. You have a limited amount of time – most times 30 days – to pay the loan back. And, don’t expect a truckload of cash.
Repaying the Loan
Unlike traditional car loans, you don’t have much time to pay back this type of loan. So stick to borrowing what you need and what you can pay back.
Lenders lend low and short on vehicle title loans. Most times they loan you less than half of the car’s worth. And, they expect full payment within 30 days – interest included.
If you can’t pay the loan off in the allotted time, you can roll over the loan. Some lenders refer to this as extending the loan.
If you choose this option, look forward to additional fees, as you will get a new loan. But some states don’t allow it. A 20% interest rate could turn into a 240% rate in a years times if you roll over.
Financial emergencies don’t give warnings most times. But try to have a repayment plan in place before you borrow.
Repossession Possibility
Lenders take precautionary measures. Your car as collateral is one of them. If you bail on the loan, the lender will repossess your car and sell it to pay off the loan.
Even in the direst situation, borrow smart. Get what you are able to pay back and nothing more. Because if you lose your vehicle, your quality of life could get disrupted.
You won’t have transportation to get anywhere – work, school, and other tasks. Be wise with your decision to get this type of loan.
Consider a Title Loan
Financial emergencies pop up and leave us in serious need of cash sometimes. Car title loans are a feasible alternative to traditional loans. If you own your car and are in need of a short-term loan, this may be the option for you.
Check out our auto maintenance guide for insight into caring for your vehicle.