At one point in time, most of us suffered financially. It can be because of sickness, which often is. This Is quite hard for anyone, even more so if you don’t have an emergency fund and are just struggling to make ends meet. In this time of the pandemic, everyone is experiencing hardship, there’s nothing anyone can do but apply for a loan. But what if you have a bad credit standing, what else can you do to save yourself from bankruptcy? Let me tell you all about car title loans and how it works, continue reading
What Is A Car Title Loan?
A title loan is a short-term loan with a higher interest compared to other loans. You need to collateral your car to borrow money. You’ll give the title of your car to the lender until the time that your loan is paid in full. People are wanting to avail this kind of loan or usually don’t require a credit investigation, fast processing that you only have to wait for 20 to 45 minutes of processing plus you can still drive your car. Borrowers grab this loan especially those who have a low credit standing and don’t waste time combing around looking for a loan officer that will accept their low credit status.
Who Can Apply For A Title Loan?
Everyone who has a car can apply for a car title loan, but of course, your car title should be free of debt or lien-free for you to be able to borrow money. When and if you apply, you have to show the lender your car, your proof of ownership, and your license. If approved, you have to surrender your title to the lender in exchange for your loan. This loan is very convenient that you can even apply online and also you can reload anytime you want.
How Much Can You Get In Exchange Of Your Car?
A title owner can apply for a loan for as low as 25% and as high as 50% of the total amount of your vehicle, giving regards to its model, brand, and the condition of the car itself. As evident at 5 Star Loans, borrowers can get as low as $100 or as high as $10,000. Bear in mind that although you can still drive your car most lenders install a tracking device or GPS so that they can monitor your location in case you didn’t pay on time. The worst scenario is that some also make a copy of your car key for easy access and repossession of your car.
How To Pay Your Loan?
If your car loan had been approved there are two ways to pay it:
- Single payment loan- most lenders give a 30 days period to pay for your loan, where you have to pay your loan in lump-sum at the end of your loan period.
- Installment loan- let borrowers pay their loan multiple times, in the span of three to six months.
The interest rate is usually 25% of the loan amount plus interest and fees. If in case you can not pay your loan on time agreed the lender can seize your car as it is your collateral. Hence you have to think twice before you apply for a loan if you are not sure that you can pay it.
All in all, car title loans are very convenient for people who need urgent cash. It needs fewer requirements, no credit standing checks, it is fast for it takes no longer than an hour but on the other hand, it is more costly than any other kind of loan, it has a shorter period of payment and it can easily put you in a cycle of the loan. You may want to research what other lenders offer when it comes to interest rates and periods of payment. And also choose a title loan office that considers at the time of payment.