Solving Your Short-term Credit Requirement Through Car Title Loans
It is a commonly acknowledged fact that the ongoing economic crisis has eaten into the credit history of many people
. Most financial institutions have been in a regulatory overdrive, upgrading their credit guidelines to extremely stringent benchmarks. As a result, a severe credit crunch is being felt, particularly among short-term credit seekers. People with average credit scores too are finding it difficult to procure a short-term loan. Among the limited alternatives that can be considered, seeking a Car Title Loan presents itself like a safer and sensible credit choice.
Car Title Loan Basics
A Car Title Loan is in essence simply a secured loan and, the security in this case is your vehicle. The amount of the loan awarded is based on the equity in your vehicle. Since the loan is based on the vehicle's value, your credit rating is virtually irrelevant, so even those with bad credit, no credit, or a bankruptcy on file can be approved for financing; the title (or ownership) of the vehicle, remains in the borrower's name at all times. The lending company has the authority to claim ownership of the car if the loan isn't repaid within the stated timeframe. Since car title loans are often sought by folks with seriously poor credit ratings, the interest charged is higher than the market norm. However, the higher interest rates are offset by the undemanding nature of car title loans.
Ease of Obtaining a Car Title Loan
Unlike bank loans or any other form of conventional financing, procuring a car title loan is uncomplicated. For starters, the lending company evaluates the car and puts forth a value on the car. This value is essentially the amount the company deems, the car would be able to fetch in the market if it needs to be sold, i.e. to recover non-payment of a loan. The loaned amount is quoted, based upon this value. Unlike traditional mortgages or banking loans, there are no hidden costs or extensive calculations involved. There are minimal financial qualification parameters and the paperwork is presented in an easy-to-understand format. The legalities for the entire process are negligible that includes basic information like proof of income/age and residence status. The only limiting condition is that there should be no outstanding payments on the car because in such cases, the title of the car belongs to the financing authority.
Car Title Loan Precautions
There has been an overwhelming increase in the number of companies presenting themselves as 'dependable' Car Title Loan providers. Please understand that Car Title Loan companies are not obligated to get their status verified by state or federal regulatory agencies like banks. These are essentially private companies and hence, evaluating their reliability as your loan provider is slightly difficult. Before deciding upon a loan provider, you should thoroughly, read through the fine print that is present in the application form and brochures. Ensure that you equip yourself with a comprehensive understanding of how the interest rate/interest amount is being calculated. It is critical that you are well versed with penalty clauses for making late-payments. Some reputable Car Title Loan companies extend the privilege of limited mitigation wherein they consider slight re-negotiation of payment conditions or allow delayed payments without charging significant financial penalties.
by: Molly Wider
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