Every credit facility has its own advantages and disadvantages and for the car title loans, there are both sides of the coin. Your credit store does not count when seeking car title loans and this is because the risk is taken away by the car you own. When you are faced with a financial need, you have options that you can take. One, you may use your credit card but this puts you in the risk of ruining your credit score.
If you happen to miss payment on your credit card, the interest rates on the balance can skyrocket to the tunes of 35 percent APR. Second, you may choose to get unsecured loans and this again could attract high interest rates that can plunge you into financial pitfalls. Third, you can get a secured loan that attracts lower interests that you can easily afford to pay.
For one, car title loans are obtained based on the value of your car. The loan is borrowed based on the equity of the car as the bench mark collateral. The equity of the car is taken to be amount that the car can sell in the market at the present or prevailing condition less the amount that you could owe on the car.
If you have an unpaid car loan balance, the equity of the vehicle is calculated as per the current market value minus that loan. When applying for a car tile loan, the process does not require a lot of paperwork and it can be processed pretty fast within a day or so. What you need to do is to prove that the car holds a value and then you apply for the loan you want and sign the car title over to the lender.
The good this with this loan is that you can continue using the car as you pay your loan as agreed upon with the lender. When you are through with your fast loan repayment, the title is handed over back to you. Although car title loans are a good option to get cash fast without having to go through a credit check or background screening, like any other loan, there are risks involved.
The main weakness witnessed in these loans is that you are likely to fall prey of lending companies that could subject you very strict and high penalties especially when you miss a payment or experience a loan delinquency. A car title loan is a short term loan, which is due for payment within a month. This means that it carries a triple-digit APR, and goes for an amount, which is less the value of your car.
It is advisable that you cautiously evaluate the reputation of the lender and read through every term of the fast cash loan contract before you sign it. Any mistake you make when repaying the loan could easily put you in trouble of losing your car. The situation can be made worse if the car sells less than the amount owed.
This means that besides losing the car, you may find yourself on the hook for paying the difference remaining for the loan balance. Because you are likely to borrow a larger amount with these car title loans, if you happen to be in a financial problem and you roll over the balance, the interest rates hike. All the same, these loans are bad credit ok meaning that you can get them even with your bad credit.
No comments:
Post a Comment