If you are cash-strapped and are looking for funds no matter how small they are and how they come, a car title loan can come to your rescue. These are loans given against the value of your car taken as security by the private lenders mostly. The amount is directly related to the value of your car.
You will need to be in full possession of the vehicle . This means that there should not be any loan running on your vehicle and the rights of the vehicle should be completely yours. The lender keeps the rights of the vehicle and they can sell of the vehicle in case of non-payment by the borrowers. There is a fee associated with the processing of the loan and one must get the details of the same before actually going for the loan. These loans are provided for an extremely short span of time which ranges up to 30days in most of the cases.
Alternatives to car title loans
Here are some of the options which you may try to avoid the car title loans:
Borrow from your friends and relatives – Often your small requirements can be fulfilled for no extra cost in terms of the interest rate if you take loans from your friends and relatives. However, you need to assure that the terms of the repayment are set in the presence of an attorney and you sign the documents prepared so as to avoid any complications later.
Bank or credit union – Instead of going for the car title loans, if you have a decent credit score and your requirement can wait for a period of 15 days it is always advisable to take a personal loan or a short term loan from the banks or the credit unions. The interest rate offer by these institutions are extremely low and one does not stand to lose their assets in case of the unsecured loans they take.
Credit Card- loans on the credit cards though are expensive but looking at the kind of flexibility you get on the repayments makes a lot of sense into taking them. One is saved from pledging their asset and also they can repay the loans at the earliest. However, one has to exercise great care in repayment of the credit card loans since any delay might lead to penalties which can become an expensive affair.
Working of the Car title loans
The process begins with your search online for the lender or your visit to the lenders office along with your car:
- Step 1: You apply for the loan by:
- Completing an application form
- Details of your car- model, year of purchase, valuation report from your side if any
- The ownership documents of the car
- Identification proof of yours
While these are sufficient to proceed with the loans there are some lenders who may ask you for the extra car keys or may convince you into purchasing some services related to the car from you.
Step 2: .In case the lender is satisfied with the documentation and the valuation of the car which they get it done using their own experts you will be approved the loan but the lenders keeps the rights of your loan at the same time.
Step 3: You will be conveyed a time within which you need to pay the loan amount back to the lender along with the fees and the interest rate associated with the loans.
Comparing the cost
The APR on the loans give the right estimation of the amount that you need to pay in extra other than the loan amount taken by you. Often the APR is quiet high in these loans.
There are cases when the borrower fails to repay the complete amount to the lender as agreed in the loan agreement. Lenders often have the provision for the rol-over of the personal loans which means that you will be allowed an extra time period for the repayment. However, there are extra fees and the penalties associated with the same and at times they are extremely high.