Do you need fast money? Is your poor credit score keeping you from accessing conventional short term new lines of credit? If you didn’t know this, then you should know that opting for a car title loan is certainly one of the best ways in which you can obtain fast cash without any income verification or credit check. Though what you know about a car title loan may seem to be straightforward to you but such loans provoke the borrower to fall into debt.
Car title loans – How do they work?
If you could carry with you jewelry or some other valuable item to a pawn shop, the representative would determine the value of the items and offer you a loan based on the items which you take. During such a case, the pawn shop lender will lend you money and charge interest against it. In case you don’t pay back the money within the time-frame, the lender will seize your items. In a similar way, a car title loan will work.
In a car title loan, the lending company determines the price of your car and offers you a loan based on what they think your car is worth. The loan isn’t similar to the one that you got when you bought your car; rather it is a short-term loan with a hefty rate. If you’re not able to pay back the funds within the set time-period, your lender will repossess your car.
Who actually qualifies for the loan?
As this type of loan is entirely based on equity that you’ve built on your vehicle, majority of the title loan companies will own your car outright. If you still owe money on your auto loan, the title of the car will still remain in the hands of the bank and hence that can’t be used as the collateral for a loan. There are some other requirements which can include your proof of residence, minimum age and income proof.
A word of caution – Read the fine print
For you it may seem simple to drive your car to the company and immediately get the money but before you sign on the dotted line, you should know what you’re committing yourself to. Watch out for the following information.
- How is the interest rate calculated over the time period? For example, you may think that 3% rate is okay but until you read that it’s 3% per month, you will realize that you have to pay 36% in a year. Also keep in mind that car title lenders aren’t subject to usury laws.
- What kind of penalties will you be subject to for non-payment? Could a single late payment lead to repossession?
- What sort of mitigation rules will be applicable? Will you need to go through mediation with the court?
So, if you’re looking for title loans in KC, get in touch with a lender who has your best interests in mind. Be sure about taking care of your personal finances so that you can pay back the loan on time and avoid incurring interest rates.