Also known as cash collateral loans, title loans for vehicles can prove to be very useful if you apply for it diligently. When it is the matter of getting instant cash for car titles, it becomes very essential to know some about a few things or factors that can affect your decision of taking such loans. Without having adequate information on vehicle title loans, you will really not be able to take the right decision when it comes to choosing the right offer from a reliable lender. This is because there are many such lenders who are willing to offer such loans despite bad credit. Further, it has been suggested by the experts that one should resort to such loans only in case of emergency because they demand your car as collateral for backing the loan amount. Here are some factors or pieces of information you must be aware of, before taking such loans that can undoubtedly relieve you from the burden of several financial obligations.
Value
The amount of your vehicle title loan is determined by the total value or worth of your car. Typically, lenders allow you to take away up to 50% of the car’s worth. They allow borrowing such a huge amount because they know that your car will become theirs in case you default on loan repayment. In that case, they can even consider selling your asset for obtaining the outstanding amount. As a result, guarantee is given to them for getting their money back. You may also come across some lenders who will ask you to add more insurance to the asset, as they will own the title although you can still use the car. You only need to make sure that you get fair amount from your car’s worth. But as a tip, never take a single dollar more than what is needed by you. This is because this will push you into the well of debts, which can harm your credit status!
Interest Rate
This can simply give you a shock! As a fact, car title cash loans are short term advances that usually need to be repaid within 30 days. Due to this term, most lenders tend to charge a high interest rate so that they are ensured of making money. Initially, the percentage rate given as a monthly rate might appear fine. For example, a lender may charge you 15 percent that is fine but is a monthly rate. So, for calculating a yearly rate, you will have to multiply it by 12, which will come to 180 percent APR. Now, this is really too high that can bring in real danger in case you fail to pay your loan back on time. This will be evident when this interest rate reaches up to a higher level. Not only that, the lender has a legal right to repossess your car forever and sell it for getting her or his money back. However, if you wish, you can stop these dangers from ruining your life by settling the issue with extension. In this settlement, you will have more time for repaying the loan amount but will end up paying an even higher percentage of interest. It may be so that you will have to pay double or triple the original amount. It is only when you fail to pay this increased amount that the lender can take away your car.
Vehicle Title Loan Companies
With increased competition, there are many title loan companies that are willing to lend you good amounts. But all are not trustworthy! Therefore, you need to seek a reputable company by doing some research online. Never ever blindly trust the online or offline ads in this matter.
Lance Brophy is a financial consultant who works for a consumer-product firm. In his free time, he loves to research on different types of loans and insurances. Right now, his focus is on getting information on vehicle title loans.
