If you’re still driving your car but need some money to get by, pawning your title might be the solution you need. Car title loans providers are usually willing to give you an instalment loan with a percentage of the value of your car as collateral. Interest rates may vary from lender to lender.
Overview: What Are Car Title Loans?
Title loans are loans that are secured with the title to your car. The amount you receive will be based on the value of your vehicle. Title loan lenders base their rates of interest on the value of your car and its equity. These types of short-term loans are typically for a small amount, but some lenders like Same Day Cash Loan also offer higher amounts i.e. up to $40,000. By paying interest on the loan, you repay your title loan with each monthly payment.
Application And Approvals: What Is The Process Of Application?
To apply for a title loan, you will need the following:
You also should know that you can get a loan even if your car is damaged, outdated and expensive to maintain. Some lenders will also provide loans for luxury car models and high-end trucks. If your income is low, many lenders offer more attractive interest rates for borrowers who are in financial hardship. Additionally, you may be eligible for a loan if you have negative equity on your vehicle, if you owe money to the IRS or if you are having trouble making payments. The following steps are to be followed by any person intending to borrow a car title loans:
- Fill out an application online or contact a lender to get more details on the terms of the loan. Most car pawn loan providers like Same Day Cash Loans, provide loans on such convenient and friendly terms that the lender is saved from all hassles.
- Provide your vehicle information and the associated title. The title of the car being used for borrowing the loans should be lien-free and the car must not be more than 10 years old. In addition to it, the car must have positive equity even though the credit score of the borrower is not perfect.
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Get the valuation and inspection of the vehicle done by the lender or anyone they prescribe.
- After inspection of the vehicle, the document verification is done. These include your car’s title, the registration papers, your Canadian license, insurance policy and proof of permanent residency. Although, it is to be noted that these documents are only for verification purposes. Only the title of your car and spare keys are kept with the lender for the loan duration.
- The car loan approval process takes 24 hours and you will be able to get the loan on the same day as you apply for it.
Repayment: How To Repay A Car Pawn Loan?
You should repay your title loan as soon as possible. Although the repayment period is short, you get at least 4 years to repay your loan in full, you may incur additional interest if you don’t pay your loan back on time. Most car pawn loan lenders will let you repay your loan in simple instalments if you make payments by the due date. You can also decide to make a one-time payment or a lump sum payment.
Also, you can decide to prepay the loan, prior to the maturity of the loan. Interestingly, unlike other forms of traditional loans, you are not charged a prepayment penalty. This means that you can pay off the loan as and when you feel you have sufficient funds in hand and not have to wait up till the end of the loan period. Most car title loans lenders offer a repayment period of four to six weeks and an interest rate of 10-12%. The term of the loan can vary from 3 months to 4 years. Most auto title loan lenders also offer a grace period of 30 days in case you are unable to make your payment due on time.
Pros: What Are The Key Benefits Of A Car Pawn Loan?
- A title loan can help you in a financial crisis situation. The application process is quite simple, the lender conducts a check on your eligibility for a loan and once they approve your application, you get the loan within 24 hours of your request.
- They don’t conduct any credit checks to ascertain your eligibility for a car pawn loan. Since banks and financial institutions do not offer such short-term forms of loans, using this type of financing can come in handy, if you need some emergency cash to tide over a problem.
- Also, you get to borrow at a lower interest rate compared to some other forms of short-term loans e.g. payday loans, so you can save a lot of money on interest if you repay your loan in time.
- Additionally, using this form of financing can help you pay off your emergency requirements before it is too late. This is because the total time from application to getting the cash in your hands takes hardly 24 hours, which is very convenient and fast.
- Another benefit is that these loans can be paid off prior to the maturity of the loans because the borrower isn’t charged an extra penalty for prepaying the loan. This is very convenient for those who have only a temporary cash problem and don’t want to stretch the loan for over 4 years or more.
- The benefits are further increased since the borrower can keep driving their car throughout the loan period. This is because the lenders do not keep possession of the car whatsoever. However, the title of the car and the spare keys are kept for security purposes.
Cons: What Are The Key Disadvantages Of A Car Pawn Loan?
The high interest rate on car pawn loans can pose a big problem to borrowers. You have to pay back the loan within the fixed term and probably at a much higher rate. Even if you are young and starting your career, finding an affordable monthly payment for this type of financing can be tough. Although car loans have a few advantages, there are also some downsides to this form of financing.
One of the main disadvantages of an auto title loan is that, unlike other forms of financing from financial institutions, you don’t get to enjoy a long repayment duration. You can repay your loan in 4 years at most. In addition to these drawbacks, there is always a risk of defaulting on loan payments. If you fail to make payments before the due date, it is likely that you will have to give away the possession of your car. The lender, in such a situation, has the right to sell your car to recover its loan amount. So, it is better to think thoroughly and analyze your position before getting this loan promptly.
Conclusion
You should go for car pawn loans only if you have really severe financial problems and need cash in a short time. Further, if you have the necessary paperwork in place and the value of your vehicle is good, it is possible to get approved for car title loans. You get a loan on easy terms and can pay it off as easily. Same Day Cash Loan is one such lender which offers such loans and helps through the tough times of the borrowers. So, if you need an urgent loan, this type of loan can help.