Car title loans are extremely popular as they give you access to the money you need in emergencies or when you need to resolve a cash flow bottleneck in your business. If you own a car, you likely qualify for a car title loan. But, is there anything you should know before you apply for one?
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You Need to Own the Car
A car title loan is simply a loan that takes your car as collateral. This makes them secured loans. Because of this, you obviously need the title of the car and you can only get the title if you own the car or have some equity in the car.
In most cases, the lender will need to see your ID and proof of insurance in addition to the car’s title. All companies offering car title loans Portland OR will do a valuation to see how much they can loan you regardless of the amount you ask for. They will take into consideration the make, model, year, the miles registered on the odometer, and any extra features the car comes with before coming up with a loan amount. Once all this is done and your documents are in order, they will give you the loan in exchange for the title. The title will be returned to you once you are done paying off the loan.
Car Title Loans Are Perfect for Emergencies
When you need a loan for an emergency, you cannot afford to wait too long for the loan to be processed. Car title loan companies will usually give you the cash in as little as 24 hours after you submit the relevant documents and complete the paperwork. Many companies offering these types of loans do not do background or credit checks mainly because these are secured loans with very little downside for the loan company. This is how they can give you the loan so quickly after the valuation and document verification are done.
It Is Best to Shop Around
Because this is a free market, some car title loans have high interest rates and very short repayment periods. Some lenders have also been known to charge extra fees in certain circumstances, such as when the lender has a bad credit history or if the car has ever been repossessed. To get a lender who will give you favorable loan terms, therefore, it is important to shop around for a good deal. There are lots of car title loan comparison websites where you can get the information you need as well as find a lender who will give you favorable terms.
There Are Penalties to Defaulting
As with any other type of loan, there are strict penalties for defaulting on your car title loan. A common penalty is increasing your interest rate for every month or period you are unable to pay the loan. The worst scenario would be the loan company taking possession of your car permanently. It is therefore important that you only take a car title loan when you need it and know you can pay it back.
Car title loans can help you find the money you need quickly. With all the benefits these types of loans afford you, there are also risks associated with taking these loans, as there is with any other type of loan. It is therefore important to look at both sides before applying for a loan.
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