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Are you looking for a short-term loan? If yes, then you should think along the lines of opting for a car title loan. When you want to go for an auto title loan, then it is essential that you pledge your vehicle as the collateral. This means that you will have to hand over the title to the lender till the loan is completely repaid.
How the auto title loan works
If you have decided to borrow against your car, then it is important that you should have some equity in your vehicle. Ideally, you should have paid all the loans that you used at the time of purchasing your vehicle.
However, some of the lenders are a bit lenient and still allow you to borrow if you are in the process of paying off a standard vehicle purchase loan. Now, most borrowers are confused about the amount they can borrow against the car.
What you need to understand is that the borrowing amount depends upon the value of your car. The more the value of the car the more you can borrow with ease. Some of the borrowers try to borrow an amount equivalent to the full value of the car.
This arrangement does not go down well with most of the lenders. The lenders only want to the lender that much amount which they can get back from the borrower quickly. Most of the lenders offer a car title loan that is equivalent to about 25 to 50 % of the car value.
Terms and conditions that apply to auto title loans
In most of the cases, the borrowers are required to pay back the car title loan in about 15 to 30 days. This means as a borrower it is important that you arrange the funds quickly. Making the complete payment of the auto title loan is referred to as balloon payment.
The truth is that it is not an easy job to make balloon payments. This is why you can go for the rolling over option. The rolling over option means that you will extend your payments. However, the important thing to understand here is that rolling over can turn out to be an expensive choice.
The reason is that you will have to pay new loan fee every time you decide to go for the rolling over the choice. Secondly, some of the states have different restrictions when it comes to rolling over option.
When you decide to go for car title loans, then it is important to make the payments on time. If you do not make your payments on time, then there is a risk that you might end up losing your car. The lender has the authority to take your car possession if you do not make the payments on time.
The best approach is that you should get complete insight about Car title loans before opting for them. When you have a complete understanding of the auto title loan, then you can plan a strategy to pay back the loan on time.
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