Car title loans are gaining popularity these days because of their facility to get instant cash. Car title loan are very convenient loan for people as these loans are easily available and the processing of these loans is very fast. People with even bad credit score can apply for these loans.
These car title loans are secured form of loan in which you get loan according to the equity of your car. Borrowers who apply for car title loan get 60% of the amount according to the market value of his car. For example if market value of your car is $10,000 the according to 60% vale you get $6,000 as loan against the equity of your car. In this loan borrower’s car is used as collateral which is pledged with lenders against the loan amount and this collateral are sold off to recover the debt amount if in case borrowers fail to repay the loan amount.
In these car title loans, it is not necessary for a borrower to maintain good credit score because credit score doesn’t effect in the approval procedure of the loan. This is because the amount of loan given is not more than the value of your car and if in case you fail to repay the loan amount then the lender doesn’t have to worry because your car is pledged with them which they sell to recover the debt amount. The only thing which is required for the approval of loan is the documents which prove that you are the owner of car.
Another benefit of these loans is that you can keep your car with yourself and use it even after getting approval for the loan amount. The only thing you have to do is sign an agreement stating that you took a loan keeping your car as collateral and in case you fail to repay the loan amount then your lender will have full right to confiscate your car.
As you know that every good thing come with some bad thing so after looking so many advantages of these loan it is time to take a look on the disadvantages of these loans. The biggest disadvantage of these loans is that you mat lose your car if in case you fail to repay the loan amount.
Another good side of this loan is that you can talk to your lender regarding the repayment of loan anytime. Like you are now facing some financial hardship and it is getting difficult for you to manage paying your car title loan then you can contact your lender stating him with your problem and the you can request for some extension in the duration of loan by which your monthly installment will get lower so that you can manage to pay off your loan amount.
Many people do mistake that they cut all the communication with lenders if in case they face problems in paying off the loan amount which is a bad idea. So, it is advised that whatever problem is you should talk to your lender so that you both can come out with a common solution which is suitable for both the lenders and borrowers.
Another disadvantage of this car title loan is that the loan amount which you borrow totally depends on the equity of your car. It means that if your car is old and its market value is less, then you will not get a high amount loan which might fail in fulfilling your requirement. So, if you are planning to take a big loan then you might don’t get approval from lenders if the market value of your car is not more than that of your loan amount.
Well, a car title loan is a good loan for people who have bad credit score and are facing difficulties in getting approval from the traditional lenders. They can easily get approval from the private lenders. All they have to keep in mind that they take the loan from a lender who is charging them low interest rate on the personal installment loans amount.