It’s certainly a great option to borrow against your vehicle when you get cash-strapped and fail to achieve a loan from any credit union or banking concern. Although few of the online resources that you come across might consider it as a predatory loan, you can always try and repay your loan by improving your budgeting strategies. Only under circumstances when you fail to repay the amount in time, you might need to bear a higher rate of interest besides fees that you pay towards origination, documentations, and processing.
Loans against a car title
The fact that this loan is secured by your car makes it easier for you to achieve a car title loan. You won’t need to undergo any credit check while applying for loans against your car. But you’ll need to have is your car title. Once you apply for this loan, the lender will only need a couple of days to get the funds transferred to your account. However, you must keep yourself from paying the rollover rate of interest. You should be confident about repaying the borrowed amount within a month or two. You’ll need to continue with the rollover interest rate if you can’t repay the loan within the first month. You’ll need to bear the interest under such circumstances. In doing so, you may end up paying more in terms of loan interest by the turn of a year.
How much you need to borrow
You may get your requirement confirmed by the lenders. While you may usually borrow any amount up to 50 percent of your car’s value, the maximum that you can achieve from these lenders is up to 60 percent of its value. However, it’s important that you borrow only an amount that you actually need. If you borrow a higher amount, you’ll need to bear a higher interest cost besides finding it tough to repay it in time.
You may need to furnish information pertaining to your insurance coverage and vehicle besides sharing a few personal data while applying for your car title loan. You may need to visit an office and submit your car title along with your car keys. Alternatively, you’ll need to get the entire process completed. Few of the online lenders will get the funds transferred within an hour or so.
A word of caution
It’s often tough for borrowers to repay the car title loans within a period of 30 days. According to a few eminent industry experts, a borrower usually takes eight months to get his car repossessed or repay the loan amount. It becomes tough for you to repay the loan amount when you need more time to accumulate funds. It will even increase the rate of interest that you’re paying of late.
You may end up paying an annual interest worth 108 percent if you start accumulating a rate worth 9 percent every month. Your car will be seized in case you fail to repay your loan. Things tend to become worse when your car fails to recover the entire loan amount. Under such circumstances, you’ll end up bearing even the difference between the price for which the car gets sold and the amount that you actually owe.