Car title loans – Are they a worthy option for fast cash?
What if you have a poor credit score but you need money fast? Don’t you think your poor credit score will keep you from obtaining the conventional short term loans or other lines of credit? In such situations, taking out a vehicle title loan is one of the best ways in which you can place your hands safely on immediate cash. If you thought that taking out vehicle title loans is straightforward and simple, you’re wrong because not being able to repay the loan on time will take you deeper into debt and sometimes even leave you without your car.
Car Title Loans – How do they work?
The loans based off of vehicle title are available at the several car title loan lending companies that you find everywhere. Firstly, the lending company or the lender will evaluate the worth of your car based on the wholesale value and then decide the amount of loan that can be lent to you. Then the lender will hold on to the title of your car till the loan is paid back. Don’t ever mistake this loan to the one that you took to buy your car. This is a rather short term loan which carries a high interest rate and it has conditions of repossessing your car in case of delinquencies and non-repayments.
Who can qualify for such title loans?
This specific loan type is based entirely on equity which has been built on your car and with majority of the title loan companies; you have to be the outright owner of the car. In case you still owe an amount on your auto loan, this means that the title of the car is still with the bank and hence that property can’t be used as collateral for vehicle title loan. Few other requirements can include a proof of your residence, minimum age and proof of your income.
Are you sure you’ve lead the fine print of the agreement?
It might seem simple that you drive your car to the title company but before you sign on the dotted line, you should know what you’re committing yourself to. Here are few things to look for in the contract.
- How the interest is calculated and the time through which the interest rate is calculated. If you see its written 3%, you might think it’s okay until you read that it’s 3% per month which will become 36% per year.
- What sorts of penalties are applicable for non-payment or late payments? Could one late payment lead to repossession of your car? Will the interest rate of the loan increase or will the additional fees be assessed for paying late?
- What are mitigation rules? Would you need to go through mediation or will you be able to take the loan company to court in case it’s necessary?
Therefore, if you’re someone who is thinking of taking out an auto title loan, you should take into account the above mentioned factors before signing on the dotted line.