You need cold, hard cash right now, but your less than stellar credit history is getting in the way of securing a short-term traditional loan or credit line. What now?
What Can a Car Title Loan Do for You?
With a car title loan, the lender will assess your car’s worth according to current wholesale values and provide you with a loan according to your car’s estimated value. The lender will then take the title of your car until the time you pay off your loan. This is different from an auto loan you took out when you bought your car; this loan is only for a short period and comes with a significantly higher interest rate. If you fail to repay your loan on time, along with the interest, you will surrender your car to the lender by default.
This loan isn’t the kind based on your car’s equity. Lenders will require that you outright own the car. This means that if you’re still not done paying off your car loan and the title is still with your auto loan lender, you can’t use your car as collateral yet. Other prerequisites usually include a predetermined age and proof of income and residence.
Should You Go for a Car Title Loan?
The answer will depend on your financial condition, but you should know what you’re getting in first. Utah Money Center and other title loan officers suggest that you must check the following details when a lender hands you the loan contract:
- How they calculate interest and the specific timeframe for which they calculate the interest.
- If there are any penalties for not paying or late repayments. See also if a single late payment will lead to repossession of your car. Lastly, check if your interest rate increases or if they add extra fees with each missed payment.
Yes, car title loans are convenient for many people but you have to borrow responsibly. Otherwise, you risk losing your car. Check different lenders; borrow what you know you could pay off in a timely manner and then pay off your title loan on time.