How Do Car Title Loans Work? The Only Guide You Need
If you have found yourself in a financial emergency lately and short on cash you might be wondering what your options are. You might also be asking yourself “how do car title loans work?” You are in the right place!
Keep reading to learn more about no guarantor loans and how title loans work.
How Do Car Title Loans Work?
As long as you own your vehicle and you have enough equity in your car you can take out car title loans. A company will lend you the money you need based on how much your car is worth. Typically they only deal with vehicles that do not have any bank loans but there are some companies that will still lend you money even if you are still making payments as long as you are current.
There are some companies that will sometimes install a GPS tracking device on your car to prevent it from being hidden in order to avoid paying off the loan. Remember your car is being used as collateral. In case you default on your loan you are giving the company the right to take over your vehicle in order to recoup the money that you did not pay back.
You will physically give them the title to your vehicle until you pay off the money that you borrowed.
Credit Score Factor
If you have a less than perfect credit score dangling over your head you do not have to usually worry about this when taking out a title loan. The reason is that you are risking losing your car so the lender does not care how risky your credit score is since they get your car if you don’t pay them back.
Whether you pay them back or not they still win because they have collateral.
This type of loan does come with higher interest rates because of their convenience. Typically you get a loan in a very short turn around time once they have your title and they have inspected the vehicle you can have your money in as little as 30 minutes. This does come with a price, which is: higher interest.
The rates average to be as much as 20% over the course of the month. This would give a $1,000 loan $200 in fees. If you find yourself in a bind they will usually work with you to roll over your fees to the following month.
Now You Can Make an Educated Decision
Now that you are aware of how do car title loans work, you can make an educated decision when it comes to putting up your vehicle for collateral. Do not ever put yourself in a situation where you find yourself in a deeper hole. Weigh out all of your options and choose the best option for you and your situation.
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