Car Title Loans Explained
You may find yourself in a position where you need some quick cash. In most cases, people will talk to car title loans when they need quick cash. Getting a car title loan may be an option if you need quick approval on a short-term loan. The problem with car title loans is that they tend to be quite expensive. You need to pledge your car as collateral to get a car title loan. You are required to hand over your car title to the lender until your loan has been fully repaid. A car title loan only makes sense if you do not have any other options during an emergency such as if you need money for medical expenses. When you get a car title loan, you face the risk of losing your car as they are generally more expensive than they are worth.
You can only borrow against your vehicle if you have enough equity in your car to fund a loan. It is a requirement by money lenders that you have the use of other loans used to buy the vehicle. Even if you are still paying off a standard auto purchase loan, you may still qualify for a car title loan with some lenders. The value of your car for the equity you have in the vehicle determines the amount you qualify to borrow. Cars with a higher value offer more cash. Lenders do not want to struggle when it comes to repossessing and selling the vehicle to get back their money, and they, therefore, do not offer the full value of the car. Most car title loans range between twenty-five and fifty per cent off at your car is worth.
Depending on your options and preferences, you could decide to apply for a car title loan through a storefront finance company, a credit union, or a bank. Credit unions and banks offer better deals when it comes to car title loans. There is no constant face on those loans, and they also come with longer pay off periods extending to up to five years. With most lenders, you get a payoff period of fifteen to thirty days.
You can decide to roll over the loan if we paying within the specified time frame becomes a challenge. This option automatically qualifies you for a brand new thirty-day loan instead of repaying your current. Rolling over the loan makes it even more expensive since you make new loan fees payments every time you do it.