While most people can try their best to establish a savings account to handle financial emergencies, situations do arise that require you to have more money than you expected immediately.
If you suddenly are in need of more cash than you have at hand, finding another option for liquidity is important. One great option to consider when you are in need of cash is to take out a vehicle title loan.
A vehicle title loan is a type of loan that is normally provided by a specialty lender that focuses on providing these loans. When you take out one of these loans, you will give your car title to the lender in the form of collateral.
If you were ever to fall behind on payments, the lender could then seize your vehicle, have it liquidated, and pay off the past due balance. If you are looking to take out a loan against your car, there are several tips that should be followed.
Know Your Car Value
One of the most important things that you need to know when you are going to take out a loan against your car is to know the value of your car. Before getting a loan from a car title lender, you will need to have your car appraised.
However, there are ways to know the value before going through the formal appraisal process. By reviewing sales comps online and using other car value websites, you can come up with a fair value estimate.
Once you know the value of your car, you should next factor in the amount of money that you owe. The lender will typically lend up to a certain percentage of the car value and deduct the outstanding loan balance from the total availability. Whatever is then left over will be the amount you qualify to borrow.
As you are shopping for a loan, you also need to make sure that you know the true cost of your title loan. A car title loan can be a more expensive type of loan compared to other types of financing.
However, the cost does vary a lot from one provider to the next. As you are shopping for a car title loan, you will see that there is normally a fixed interest rate that you will have to pay. However, since the duration of the loan is shorter than a full year, the actual APR can be considerably higher.
Borrowers on car title loans also need to make sure that they are accounting for all the other fees that are included with a car title loan. Some of the other fees that are included can be origination fees, extension fees, analysis fees, and even early repayment fees if you were to pay off the loan prior to the maturity date.
Process for Approval
Before getting into the loan, you should also make sure that you have a full understanding of the process for approval.
Car title lenders typically will allow you to apply for the loan online and will only need to verify your identity, bank account information, vehicle value, and source of repayment.
Once all of this is known, they can normally approve the loan very quickly and have it funded into your account within a matter of days.
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