All loan types come with their risks especially if you fail to pay up or default. However, the risk for a car title loan can even be higher as you can lose your car to your lender. Hence, before you decide to use your car as collateral for a loan make sure you consider the pros and cons and have a good plan in place.
What is a Title Loan?
A car title loan allows you to borrow from 25% to 50% percent of the worth of your car by using the title of the car as collateral. It is a type of short-term loan that can last for 15 to 30 days and in some cases, it can last up to six months. It is a secured loan since it involves using the title of your car as collateral.
To secure a car title loan, you must own your car outright. Owning your car outright means that you are not owing on the car. this means that there must be no lien placed on your title and the title must be in your name. Although, some lenders can still grant you the loan if the car is nearly paid off but this is not common.
How Car Title Loans Work
You use the equity in your car to obtain a car title loan. Car title loans can come as an installment payment over a period or as a single payment over 30 days.
When you apply for a car title loan in Las Vegas, you will take your car for assessment and the lender evaluates and inspects your car to approve a loan amount based on the current market worth of your car. this amount is credited into your account and you can start to repay the loan.
This means that the amount of loan you can borrow depends on how much your car is worth. Your lender will also ask for other documents such as a proof of identity such as a government ID, proof of residence, insurance for your car, and sometimes proof to show you have a steady source of income or investment.
Do I have to Give Up my Car?
No, you don’t have to leave your car with your lender when you secure a title loan. You can still have your car to yourself for your personal use. However, you will drop your title with the lender who will keep the title until you have completely paid off the loan.
However, some lenders install a GPS device for tracking your car while you are paying off the loan. This is referred to as a “Kill switch” that makes it easy for them to either prevent your car from starting or easy for them to repossess your car if you default or fail to pay.
Downsides to title Loans
The major fear or risk in taking out a title loan is the possibility of losing your car. it also comes with very high rates and charges. Find out more informations from the Consumer Finance website.
Other Documents Needed
Here are some of the documents that your lender may request;
- A clear and free title in your name.
- A government-issued ID.
- Proof of residence such as utility bill.
- A payslip to serve as proof of income.
- Car insurance.
With the documents listed here, you can easily get a car title loan. If you own a car, this is one of the easiest means of securing quick cash loans, especially in emergencies. Do not hesitate to leverage the advantages that come with a car title loan when you need quick cash loans.