Are you in a financial pickle? Offering your car as collateral on a short-term loan is one way to survive until pay-day.
Christmas is coming up, even though all the experts keep warning people not to overspend during the festive season, you would like to purchase a few gifts and some festive food for your family and friends. You feel that your family have sacrificed a lot during the year, so there is no harm in wanting to spoil them; however, there is one small problem. Your credit score is very low so no traditional bank will consider offering you a loan, never mind granting you the loan.
What do you do?
Well, there is are alternative ways of securing a loan. One options is to look at applying for an auto title loan through a company who specializes in granting car title loan.
Before we look at the nitty-gritty details of a car title loan, let us have a look at the definition of a car title loan.
What is a car title loan?
According to Investopedia, a car title loan is “a short-term loan in which the borrower’s car title is used as collateral.”
There are a few criteria linked to a car title loan. You must own the car outright. It’s important to understand that, if you are still paying off your car, you will not be able to use your car as a warrant to secure any form of a loan. The second important point to note is that a auto title loan is a short-term loan which means that it needs to be paid within 30 days from the date that you took the loan out on. If you do not repay the loan within the specified timeframe, then the lender has the right to take ownership of your car and sell it to recoup the loan amount.
Applying for a loan
Because there are no credit checks and it doesn’t matter what your credit score is, it is very easy to apply for a short-term loan. Car Title Loans in Los Angeles offers borrowers the opportunity to call them or to apply online. Their application process doesn’t include the dreaded credit check. They use your car title deed as security that you will repay the loan.
How much can you borrow against your car?
The salient point here is that you can only borrow what your car is worth. Part of your loan application will include an evaluation of your car, based on its make, model, year, and condition. If the lending company believes that your car is worth $500, then the maximum loan you can take out will be $500. Obviously, if the lender believes that your car is worth more, then they will offer you a greater-valued loan.
The greatest advantage of taking out a car title loan is that you are able to continue driving your car for the duration of the loan. All you need to do is to ensure that, before you take out an auto title loan, you are able to pay the full amount back within the stated time, otherwise you will lose your car.