When you are in need of cash and you need that quick fund, a car title loan can be a perfect option for you. If you get this type of loan with the actual knowledge of how it works, this loan option can be a credit saver. A car title loan is a loan that can be done quickly and you can get the cash the same day, and as long as it is paid back as at when due, it is also a great option for a loan with less headaches and less paperwork.
A car title loan is a loan that you secure through the value of your paid off or nearly paid off vehicle. It’s not possible that a loan will be given to a person that still owes on the vehicle. Therefore, you must be the title holder of the vehicle. The value of the loan will be the resale value of the vehicle. The older and less gently used the vehicle, the less will be the amount of the loan. Newer vehicles will have greater loan prospective.
These loans have high-interest rates to encourage the borrowers to pay them back at the scheduled time as well as create a large profit margin for the lender. If paid back within thirty days, which is the normal length of the loan, you’ll pay only one interest fee which will be high, but may be worth what you need the money for.
If you’re unable to pay the loan back within 30 days, they can be rolled over to the next month. But, every time the loan gets rolled over, another interest rate is charged. These fees can add up and you can end up owing more than the amount you borrowed. If you’re unable to pay your loan at the end of 6 months, your car is at risk to be repossessed and sold by the lender in order to regain their loss.
If your plumbing has gone out and you are sitting in three feet of water in your home, a car title loan may be your answer. If you get a traditional loan, it may take weeks for you to get your check and by then your home will be destroy. This is an example of a way that this type of loan may be used wisely. If you have unforeseen medical expenses, this type of loan can also take care of that.
Before you agree to this type of loan, ensure you have a plan for repayment. A car title loan can be a savior when used properly. It’s something that will take careful consideration before agreeing to, but it will be there for you when you need it. Those that have been in that position can tell you that you really need that money. If it is paid back on time, it will reflect on your credit score.
Advantages of Car Title Loans
- The lender does not require you to have a good credit history to access these loans.
- You can keep the car and still drive it after obtaining the loan.
Disadvantages of Car Title Loans
- You can lose your car if you fail to pay back the loan.
- You can’t borrow more than the value of your car.
While there are many risks involved with car title loans, they are the best ways of getting fast money. To ensure that you do not lose your car, you must ensure that you can repay the loan. You should also maintain active communication with your lender.