In the finance market, there are a number of opportunities through which you can get instant access to the cash you need. Car title loan is one such loan that is gaining popularity among borrowers at a rapid pace. However, just like any other loan it too has its pros and cons and therefor you need to be cautious and knowledgeable while you take out such a loan.
It is true that if you use a car title loan properly it will reduce your financially stressful situation but it can also add to your stress if you do not make the payments on time. What is more, you will have to sacrifice your prized possession: your car and commute in public buses and tube God knows for how many years till you can buy another car, if at all.
How it works
You must first know how a car title loan works. In this lion you put your car as collateral provided it is paid and free from any in cumbrances. You can obtain such a loan from a traditional bank or a finance company or from any online money lender.
The working process will depend on the lending policy of the lender as well as the company you chose. While some companies may allow you to use your car even after taking a title loan on it but there may be a few that may want to keep possession of your car till the time you pay off the loan.
- To get the loan you will need to take the title as well as your car to the potential lender.
- They will check the car by its make and model, year and the resale value currently prevailing on the market.
- They will also look at the actual condition of the car.
- In general, you will get about fifty perfect of the total resale value of your car as determined by the lender.
You may need to pay it up with a lump sum payment or with interest as high as 300% if you cannot pay the full amount.
Things to consider
When you think of taking out a car title loan there are a few things that you should consider beforehand. These are:
- Look out for a lender that offers title loans San Diego Area to borrowers with bad credit
Alsocheck whether you can get a co-signer on your loan
- Check whether or not you can work with your current creditors and use the money to repay the bills
- Consider the rate of interest to pay on the loan in addition to the principal loan amount
- Check out much your monthly payments would go up
- Though these loans are usually offered for 30 days check out if there is any scope to renew ii if you cannot repay it in full by that time
- Check at your options and resources to make a plan for repaying the loan and
Make sure that you also make a proper budget to have enough funds to repay and not fall behind the payments.