If you need quick cash to pay your bills, sort out an emergency or pay off a debt, a loan may come in handy. But what if you have a bad or no credit for a loan approval? In this case, a car title loan will make sense.
A car title loan is a short-term loan that is secured by your vehicle. There are little to no credit requirements needed when purchasing a car title loan. However, the borrower’s car will be used as collateral to get the loan. If the borrower doesn’t make payments on time, he may risk losing his car to the lender. Even though you have very bad credit loans no guarantor direct lender, there will always be a way to fix and make everything right. You will just have to see the options.
Most car title loans are short-term, the time frame ranges from 15-30 days; but due to varied reasons, some people choose to roll over their loan. Instead of paying the loan on a short-term, they pay on a long-term and have interests pilling up.
How Do Car Title Loans Work?
You can easily start the car title pawn loan application online. First you need to have enough equity on your car, you ought to have completely paid all the other loans you may have used to buy the car. There are some lenders who still approve for title loans if the borrower has an existing auto-purchase loan.
The value of your car determines the amount of money you can borrow. Therefore, the greater the value of your vehicle, the more the cash you can borrow. Most loan amounts range from 25% to 50% of your car’s value.
In order to get approved for a car title loan after application, you must submit your title, Identification documents and proof of insurance. In some cases, you are required to produce an extra set of keys.
Once you sign the contract, you agree to pay the loan fees as well as the interest. You will get the money you applied for and the lender keeps your title until you completely pay off the debt. You get to continue driving your car through-out the payment process.
Some lenders may however choose to install a GPS tracking device on your vehicle to prevent a borrower from hiding the car in case of failure to pay the loan.
What You Should Know Before Getting a Car Title Loan
- If you Can’t Pay Your Loan, You Could Lose Your Car
If you successfully applied for a car title loan but you are in a position where you can’t repay the amount you borrowed, the lender could recover your car. To make it worse, you end up paying more money to get it back, plus the amount you owe the lender.
- There are Alternatives to Car Loans
If you want quick cash, a car loan is not the only option. There are other options that may cause you less and may have less risks involved. Some of these alternatives include:
- Asking from a friend
- Seek help from charities or religious organizations
- Try out a pawnshop exchange loan when you need some money and have something of value in exchange.
- Request for a salary advance from your employer.
If you opt to take the car title loan, make sure you are in a position to pay it back as soon as possible to avoid your car being repossessed as well as to minimize cost.