There are numerous types of car title loan available in the market. For instance a conventional lending financial institution will take up the car’s title in order to avail the borrower with the loan amounts they requested for. However, there are other specific car title loan companies availing the loan as well.
How does a car title loan work?
The way these types of loan work typically depends on the type of Loan Company the borrower is using. In most cases, you get a loan on your car title but still keep utilizing your vehicle while paying back the loaned amounts. However, there are other instances the lender is forced to ask for the car and keeps it until such a time the borrower will be in a position to pay back the advanced amounts of loan money. This is especially so, in the case of bad credit holders.
The borrower takes both the car and its title for evaluation before the lender could look into the applicant loan request. They will normally value the car according to the make, year of manufacture, and then will consider the resale value of the said car. They will then look at its actual value in order to determine the car’s depreciation factor. Typically the borrower may qualify for a loan of up to fifty percent of the total resale value of their car.
Upon receiving the loan, they will be required to either make a lump sum repayment at a specified date or make payments upon the interest if they couldn’t make a full repayment at the moment. The rates of interest for this kind of a loan is generally high.
However, there are certain unique advantages associated with these loans.
For instance, the borrower gets the loan money instantly, regardless their credit history or their financial situation as long as they provide the lender with the title of their car. Once the applicant’s loan request has been approved, and the money is availed, they can use it on whatever was on their minds. Furthermore, the loan is relatively small, thus it is repayment is easier.
However, anything that has advantages has also its disadvantages. For instance, these loans come with a higher fees and rates of interest. If a borrower defaults on the loans repayments, they risk losing their car. The title must be in a borrower’s possession and free from any liens.
Overall, if you are having trouble finding a suitable loan elsewhere and have bad credit, your car title should act as the vessel to use in order to be availed with the required amount of money. However, the borrower should make sure their car’s title is free and clear from any previous financial impediments, and be sure they have the capabilities to repay back the advanced amounts of money, or they risk losing their car in case of any loan’s defaulting.