You can avail car loan if you need some quick cash. The lender holds the vehicle’s title as collateral for the short-term loan. The loan amount can vary from $15,000 to$2,500 depending on your residency, the process is quick, and you get the cash instantly. Getting a personal loan based on the credit score is long drawn and cumbersome, whereas getting a car loan is straightforward at a competitive rate. Even you can pledge a vehicle without a title, such as boats, motorcycles, commercial vehicles, and landscaping equipment, for a short-term loan. Some lenders do not scrutinize the credit score or employment proof for approving a loan against the title of the car. Even persons with poor credit ratings can access car loans.
Short loan tenure
In a title loan, the document that proves your ownership over the vehicle is kept as collateral for granting a short-term loan. The tenure of the loan is from fifteen to thirty days, and within the specified term, you need to repay the amount with an agreed rate of interest to redeem the title of the car. After the stipulated time, if you wish to extend the tenure, you need to pay the minimum interest due. Suppose you can afford to pay a portion of the principal amount along with interest to reduce the overall balance. If the lender agrees, you get another thirty days’ time to repay the balance amount and transfer the title in your favor.
Does not affect credit score
The short term auto loans come with a stiff rate of interest. Even the best lenders charge triple-digit annual interest rates inclusive of interest and processing fees. Many additional charges are included in an auto loan, such as processing, documentation, and loan origination, summing up to a few hundred dollars. Usually, a car loan against title does not impact your credit rating as no credit check is performed during the processing of the loan. Moreover, no information is sent regarding your repayment to the credit rating company. In case of default, the lender takes away the vehicle and sells it recovers partial or full loan money. No financial transaction is reported to the credit bureau hence your credit score remains unaltered.
To access a car loan, you must be above the age of eighteen, nineteen in the province of Alabama, owner of a vehicle, whether motorbike, boat, car, or RV. You must possess a clear title of the vehicle, an insurance document for a loan for or more than $3,000, proof of residence (car registration/ utility bill/ rent receipt), and a government-issued identity document. As with any other financial product, car loan has their own pros and cons. The major advantage is the easy approval of loans, even for people with poor credit ratings. The only prerequisite is the title of the car and income statement that meets the lender`s condition. The process is quick as no credit check is performed. If you meet the T&C of the lender, you get the cash within a few hours.
Remember, if you default car title loan, you can lose the car. 80% of car loan borrowers either extend the tenure or take a new loan on the day the original one is due. So avail of this loan only if you need are in dire financial need.