When financial emergencies arise, it is a good idea to take stock of all your assets available for use as collateral. One of these assets can be your car. Its pink slip can be put up as collateral, allowing you to get a sum of money to help tide over the financial emergency. Though these loans might prove helpful, there are a few facts that you must know about these kinds of loans beforehand.
The Payments Are Automatic
In the case of car title loans, the repayment process tends to be automatic. As a result, you can rest assured that your loans will always be paid on time. Automatic payments can also be implemented for the capital provided by the loans. The majority of lenders dealing with such loans tend to offer small payments suitable for the client’s potential for paying back the money. Your personal preferences and requirements will always be taken into account.
The Loans Are Quick
One of the major benefits of car title loans is the speed with which it are approved. It is significantly faster compared to traditional loan schemes. The approval process is similarly fast, taking as little as an hour in most cases. In the case of traditional loans, the approval process itself can take nearly 7 days to complete.
The Absence of Credit Score Checkup
Another major advantage of pink slip loans is the lack of credit score in the process. Lenders rarely check the credit score of the borrower when approving these loans. This is particularly beneficial for those whose credit score is low, making them ineligible for other kinds of loans. The credit score is unnecessary in these loans because of the presence of collateral, namely the car.
The Loans Are Convenient
Car title loans offer a high degree of convenience to the borrower. You can apply for these loans online with minimal hassles. Once applied, the lender will take care of the other processes required for handing out the loan to you.
The Car Affects the Loan
Since you are opting for a car title loan, you will find that the loan amount is being affected by the value of your car. All lenders will appraise the vehicle you are putting up for collateral. Through the appraisal process, the lender will determine how much the car is worth. Based on it, they will offer you a loan amount. For these kinds of loans, the loan amount will always be lower compared to the appraised value of the collateral.
The Risks
Like with all types of loans, you will be running a risk if you do not pay it back. In the case of car title loans, you will be putting up your car as collateral. As a result, the lender has the right, legally, to repossess your car if your loan is not paid back in time. As such, you must ensure that the loan is repaid within the given term to prevent your car from being towed away.
Other Important Facts
There are a few other things you must keep in mind before getting a car title loan.
- Always find a reputable lender. A reputable lender is more likely to offer you reasonable rates of interest. You must take steps to avoid scammers.
- Shopping around is vital. Not all lenders will offer the same rates of interest. They may even offer varying amounts as a loan with the car as collateral. By shopping around, you can find the most suitable terms.
- Learn whatever you can about car title loans and the laws governing them. You do not want to be caught off-guard later.
Pink slip loans can be excellent financial options. However, you must make sure that it is the right one for you.