Perhaps you have heard of car title loans, but you don’t understand what it means. Are they a secure financial option? How do they work? A car title loan is a secure loan which involves a borrower making use of his or her vehicle as security for the loan. The borrower will surrender the title of the car to the lender. A copy of the car key is also essential. After the borrower makes all payment of the loan the keys and the car title will be given to the borrower and the lien will also be released. However, if the borrower fails to repay the loan he or she will lose the car.
A car title loan is a short-term loan which carries a higher interest rate than a conventional loan. Car auto loans companies do not always check the borrower credit history but will evaluate the condition and value of the vehicle to decide on the amount to give out as a loan. Some borrowers always default on this loan because they are in financial difficulties or were not in the position to take loan. This makes it riskier for the lender.
The car title loan will only take a few minutes to achieve. The borrower can get up to $100 to $10,000. Because of the risk involved with some borrowers, credit unions and traditional banks may not offer this type of loans for many people. But, borrowers are still required to have a reliable source of income and employment. After this is verified the borrower’s vehicle will be inspected and appraised before any funds are received. The lender will offer the borrower some percentage of the value of the vehicle. This gives the lender an assurance should the borrower fails to repay the loan and the lender need to sell the borrower’s vehicle to regain their profit.
Kelley Blue Book values are used to find the value of resale on vehicles. The car you’re using as collateral must have some equity which must be paid in full with no other claims or liens. It also needs to be insured. Repayment of loan is usually due within 30 days. However, if the borrower needs more time for repayment, the lender may work out a different payment schedule. If the borrower is not able to pay the balance of the loan at the scheduled time, he can roll over the loan and take out a new loan with more interest. This can become costly while putting the consumer in danger of getting over their head with loan repayment duties.
The government reduces the number of times a lender can roll-over the loan so that the borrower will not be in a cycle of debt that is endless. If the borrower defaults on this payment, the vehicle will be repossessed. Car title loan companies can be found online. When applying for one of these loans the borrower will need some forms of identification which include proof of residency, government-issued ID, clear title in your name, proof and references of car insurance. After getting the loan, the borrower will be able to drive the vehicle. The funds will also be available within 24 hours and will be deposited in the borrower’s bank account.