If you’re looking for a short-term loan, you can get a car title loan. There’s one thing you should consider, though: they cost a lot. Once you’ve made up your mind to get it, you must pledge as collateral for that loan your vehicle.
Some extreme cases require funds and, if you cannot get them from other alternatives, you could try getting a car title loan. However, the loans can be more expensive than you’d think, and if you don’t pay them, you can lose the car. With that in mind, let’s see how car title loans actually work.
1. The Things You Must Know Before Getting a Cart Title Loan
Getting car title loans is not very difficult, but first, you need to own the vehicle you pledge for the loan.
It’s very important to know how much money you can borrow. The value of your car or the so-called ‘equity in the vehicle’ will set the amount you can borrow. So, if the car has a great value, so will be the title loan. Lenders will usually lend you the amount that can be quick and easy to get for that car if they were to sell it in case the money isn’t returned.
The loans provided by Car Title Loans California usually range from 24 to 48 months. If you pay off your loan early, no need to worry because there is no prepayment penalty. The team at Car Title Loans California also offer same day funding. They also require you to provide proof of income to ensure you can afford the loan you are applying for.
A lot of cases end up in ‘rolling over’ the loan, meaning you extend repayment by another 30-day loan. The problem with rolling over is that it gets very expensive and every time you prolong the loan, you pay new loan fees. In some states, the extending of a car title loan is limited by laws.
The costs that come with title loans are higher than the interest rates one usually pays on credit cards, even though state laws limit interest rates. So, you’d end up repaying a lot more money than you borrowed.
2. The Risks of Losing Your Car
A big problem with getting car title loans is the risk of losing the vehicle. This could happen if you can’t pay the lender. The car would then become their possession and by selling it, they will get their share of the money – usually meaning all of it.
Losing the car is, obviously a very big issue. It will make it difficult to get to work, to complete daily chores like shopping or getting the kids to school. Not having your own vehicle and relying on public transport or other people can be time consuming and stressing.
3. What to Do Before Getting a Car Title Loan
Consider all of these other options. This next list might help you out with some alternatives.
Ask for a personal loan from the bank or credit union. The loan will have a longer term and with lower interest rates.
Use credit cards, even if it’s not the smartest way to borrow, but at least you won’t lose the car.
Think of getting a second job, even for a short time to get the extra income. Before thinking it’s impossible or too demanding, try searching for something that you can easily squeeze into your schedule.
Try to cut some of the items you usually buy and you’ll see that you’ll save yourself some money to get through that rough time.
You can even try to sell your expensive car and get a cheaper one. This way, you’ll get to use the difference of cash you get from downgrading.
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