If an individual needs money quick, often they will try to work some extra hours at their job or ask for help from family and friends, or they might apply to get a payday loan. However, for anyone who owns their own car, another method is available to you.
According to The Net Lender car title loan can be a very good way of obtaining cash fairly quickly. However, there are inherent risks involved as well. If you are not familiar with what car title loans are or the way they work, then you have come to the right place. In our guide, we will be discussing all of the important facts about car title loans that you need to know.
What is a Car Title Loan?
With this type of loan, a person puts their car up as collateral to have their loan approved. This type of loan can last for as short or long as you want it to, and they do require that you own your vehicle outright. If you do not repay your loan on time, the lender has the legal right to take possession of your car, and then sell it in order to get the amount of the loan back.
How Do Car Title Loans Work?
This type of loan works in a similar way that other secured loans do. You offer your car as collateral for the loan in the event you are unable to repay it. The amount you are able to borrow is based on how much your car is worth. Usually, a lender will feel comfortable loaning you around 25-50% of the total worth of your vehicle. That is to help to ensure that they will be able to sell it quickly in case you default on your loan so they can recoup the amount of the loan that is still owed.
Like standard loans, your interest rate will depend on many different factors. However, since your car is being put up as collateral, you have a good chance of possibly getting a low rate.
Car Title Loans – Pros and Cons
Although the decision is ultimately up to you and is going to depend on your individual financial and personal needs, the following are some of the main pros and cons to consider when making your decision according to Rubin Suh of The Net Lender.
Pros
Typically, car title loans are less expensive compared to other types of short-term loans such as payday loans according to The Net Lender. That is due to the fact of there being collateral offered.
You do not need to have spectacular credit since you are putting collateral up. If you end up defaulting on your loan the lender won’t be negatively affected too much.
You can use the money you borrow for whatever you want to. So whether you want a brand new TV or have medical bills or an emergency expense, a car title loan will be able to help you in various ways to meet your financial needs.
Cons
The loan amount that you will qualify for is going to depend on how much your car is worth. So somebody who has a damaged or older car won’t be able to get as big of a loan compared to somebody with a newer car that is in good condition.
One of the main drawbacks to getting a car title loan is that you put yourself at risk of losing your car. Losing your vehicle due to not being able to keep up on your loan payments frequently can result in you having even more financial difficulties, so it is important to always know what you are getting yourself into before you agree to a loan.
How to Select the Best Car Title Loan
Like with any kind of loan you receive, it is important to put in some research and thought before you sign anything. Each loan and lender will have its own terms and conditions. You need to make sure you only take a loan out that is best for you.
It is important to shop around with different lenders and compare various kinds of car title loans. They will have different fees and interest rates, and various lenders will offer you various amounts. Some will provide more flexible payment terms. You will need to determine which features the most important ones for you, and the ones you won’t benefit from much. The right loan for you could be different than the one that is best for your neighbor or friend.
Title Loan Requirements according to The Net Lender
Now that you have read our guide and learned about all of the important facts regarding car title loans, you may be thinking it is the best option for you. There are a few requirements that you will need to make sure you can meet in order to qualify for a car title loan. First of all, you will need to give the lender your personal information like your name, phone number, and address.
You will then need to give them information on your vehicle, like the mileage, year, model, and make. That will help you lender make an accurate valuation of your car, and determine the amount of money that they can lend to you.
You will then need to give them your employment information along with proof of insurance. After you have met all of those requirements, you should be all ready to receive a car title loan.
