A lot of times in a serious situation we may be strapped for cash and looking for ways to get out of that sticky situation. You’ve gone from bank to bank asking for a loan and been denied at every opportunity due to poor credit or just simply having no credit. One viable option one can choose is getting a Car title loan.
A car title loan is in situation where you need cash short term but with all the regulations are given at higher rate. Since there are no credit checks that’s why they can get away with charging a higher interest rate to defend themselves against any customer that decides to default. Also, why your car is put up for collateral because since they now own the title they have the ability to take your car from you. You can borrow money against the market value of your car.
Your car can be used during the duration of the loan. This will put your car up for collateral until the loan is paid off. Another alternative to traditional credit are title loans. This is where you can borrow money against the fair market value of your car which is usually around 25 to 50 percent of the value of your car. The usual amount borrowed can range anywhere from $100 to 10,000 dollars. The period time for this loan usually lasts around 15-30 days and have triple digit annual percentage rate (APR). After doing this you should realize your car will be considered collateral until the duration of the loan is over. Similar to payday loans, are usually pretty easy to get and will not do a credit check.
When you commit to this type of loan you have to do it under the assumption that if you default on the loan there is a risk that you could lose your vehicle. If you are receiving this type of loan you can’t afford to lose your vehicle because you have to get to work. It’s really important to exercise caution and to make sure you are in a position to repay the loan. Which is why it’s important to review the terms of the loan before you sign. Not saying lenders are “shady” but many of them will include add ons or APRS that will increase dramatically if a payment is missed. Title loans tend to be a more expensive because on average they charge about 25% to finance the loan which can be higher. Do your research and good luck with finding the lender for you!
Paying Back the Loan
In order to pay back the loan, there are three different ways you can go about it. Online, in store, or through automated payments. Automated payments are setup directly with the company and you provide them with your bank information so when payment is due, it comes out of bank account automatically. For payments to be taken out its really important that you realize you have to authorize them to do so.
All in all, if you are in a desperate crunch and feel like there’s no way out, getting a car title loan might be best suited for you. It’s important to realize the amount you may be ending up paying back at the end of loan period.