.png)
We all need money to take of financial issues when they occur – whether they’re expected or not. When you don’t have the available funds to handle it, you may need to ask for a loan from your friends or certified lenders in your city.
And while there are several loans available to help you achieve your physical or business needs, there are often filled with background information you should know about. Car title loans are a form of loan where you trade the title of your car for the desired sum.
Your car will act as collateral pending when you make repayments plus interest to the lender. If you do not make payments on time, the lender is bound by law to reclaim your car.
It sounds easy, doesn’t it?
Well, it isn’t. There are a lot of gray areas that you need to know before deciding to apply for a car title loan. If you don’t know about this information beforehand, you may be jumping into something you may not like. However, with informed knowledge about car title loans, you can make a great decision about applying or not.
This article will discuss all the factors you need to know before jumping at the prospect of applying for a car title loan.
Car Title Loans Are Similar to Payday Loans
Car title loans are pretty similar to payday loans because it is short-term loan with a maturity date of 15 – 30 days. This means that if you apply for the loan at the beginning of the month, you may be paying back the loan with interest at the end of the month. So, when you take a car title loan, remember that repayment is around the corner.
However, some car title loans can extend as much as 6 months, depending on the nature of the loan and the agreement made with you and the lender.
You Can Borrow Up to 50% Of Your Car’s Worth
When you apply for a car title loan, you can get up to 50% of your car’s value as a loan. Typically, these loans range between $100 to $5,000, depending on the nature of your vehicle. You can also get more depending on the arrangements made with your lender.
You Must Own Your Car Before Applying for a Car Title Loan
As the name suggests, Car title loans are a type of loan where you’d have to submit your car’s title to secure the loan. Most people don’t realize that you must completely own your vehicle to be approved for a car title loan.
Some lenders may not approve your loan request if you don’t own your car outright. Some lenders may ask for your other documentation, such as a valid ID and proof of insurance, before approving your loan.
The Lender Won’t Conduct a Hard Check
One of the many advantages of car title loans is that the lender won’t conduct a hard check on your credit when you apply for them. Hard checks involve checking your credit to see your debt-to-income ratio, payment history, credit score, and several factors in your credit report.
These checks show up on your credit report and will reduce your credit score. In the event that you approach multiple lenders and they carry out hard checks, your credit will suffer for it.
However, you don’t have to experience that with car title loans. The reason is that your credit has no relationship with the collateral you’re submitting. The lender’s focus will be on the car and the car alone. And if they happen to conduct a check on your credit, it will be a soft check.
Soft checks do not appear on your credit report or impact your credit score. So, you have absolutely nothing to worry about there.
Faster Approvals
Another advantage to applying for car title loans is that they’re quickly approved by a certified lender. The lender asks for your car title, which they will hold on to while the loan is provided.
If you do not fulfill your end of the bargain, they are bound to repossess your car. This is why car title loans do not require the paperwork other typical loans may ask of you.
You Can Run Into Debts
Another factor you need to consider is running into debts with car title loans. With maturity lasting 15 to 30 days, it is necessary to pay back the loan. If you fail to pay the loan at the agreed date, the lender may choose to roll it over to the next month with new additional fees and charges. Or worse, your car could be repossessed.
You May Lose Your Car
No one wants to envision this possibility, but if you fail to pay up your loan, your lender could repossess your car for themselves. One of the fascinating aspects of this is that it doesn’t matter if you’ve been making partial payments. As long as you don’t fulfill your end of the bargain, you miss out completely.
Final Thoughts
Car title loans are what you need to apply for if you need urgent cash to sort out current expenses or unexpected mishaps. The benefit of this loan is that you can easily apply for the loan and get approved by a certified lender without hours to days. More so, you can borrow up to $10,000 depending on the arrangement you’ve made with the lender.
However, your car’s title or pink slip will be held by the lender as collateral pending when you’d pay off your loan. Remember that lenders may not approve your loan if you do not own your car outright.
Here at Bunny Lender, our job is to connect you with hundreds of certified lenders in your city that will handle your request. All you need to do is input your location, and you will see the results tailored to your specific searches.
Check it out here.
