Unexpected expenses can come up uninvited and cause you trouble if you don’t have money in your savings. Sadly, not all of us have a good bank balance. According to reports, average American household only has about $2,900 in the bank saved for the rainy days.
It should be mentioned that this is not individual savings, but household savings, which shows how bad the conditions really are.
It should also be mentioned that not everyone has these savings, and not all would like to use these to cover for expenses related to their vehicles. For such people and for such times, there are car title loans.
These loans are short term secured loans (loans provided upon lending your property to the lender) and offer a great deal of help when you are in dire need of money.
The loan is also very easy to get, but the most important thing is to have the car under your own name when you apply for a car title loan.
A car title loan works by lending the title of your car to the lender for a time period in return for instant cash. You get your car title back once you pay back the loan.
Car title loans are far better than other loans because they are same day loans, meaning, you receive the cash on the same day. Plus, the lender won’t look into your credit score before lending you money.
Let’s learn more:
How Does It Work?
You need to approach a lender along with your car and the title. The lender will decide the amount of money that can be given as a loan based on the condition and make of your car. This is usually about 25%-50% of the car’s value.
Normally, lenders provide a month’s time to the borrower to repay the loan along with the interest rate. However, in some cases you may get more time to pay the loan. Moreover, some lenders also offer installment payments.
Keep in mind that a financed vehicle won’t work here because you will still be paying the installments of the vehicle every month. Hence, a financed car can’t be used as collateral to get a car title loan. You need to fully own the vehicle and must have no debt on it.
What’s The Interest Rate?
Typically, the APR set for a car title loan to be paid back in a month is 300%. However, it may be more or less depending on your specific situation. So, make sure to be clear about this factor before you apply for a car loan.
How Much Money Can You Get From A Car Title Loan?
If your car holds good value then you can get a loan for up to $50,000. This is a big amount, but you do not have to worry as you may apply for a small loan as well.
While the big amount is the biggest benefit of such loans, you must remember that getting larger loans can be troubling if you don’t have the means to pay it back in the amount of time which is given.
Possession Of The Car
Since the loan is called a car title loan, does it mean that you lose the possession of the car and lend it to the lender until the loan is repaid? No. You can drive away with the money.
All you need to do is hand over the title of your car to the person you have borrowed money from. However, this only works when your car is insured. If it isn’t insured then the lender might want to possess the vehicle until the loan is paid back.
Mostly, car title loans are applied for by people who need a lot of loan money, but make sure to have the means to pay it back so that you do not end up losing your vehicle.