How Much Equity Does Your Car’s Title Possess?Fast Action Finance SEO
One of the quickest ways of getting cash without so much paperwork is an auto title loan. Moreover, you do not have to worry about your credit score as a fundamental requirement as it is the last thing that will get in the way when you need fast cash. An auto title loan is a secured loan that uses your automobile as collateral. As such, this bad-credit instrument comes in handy during bad financial times as a short-term loan solution with lower interest rates. The question is how much equity does your car title really possess? Well, you are about to find out.
Automobile and depreciation
It is important to understand that the minute a new vehicle leaves the parking lot, it automatically starts depreciating. That explains why a great deal of people seems totally surprised when they apply for an auto title loan and have their cars inspected. When you apply for car title loans in Mississauga, your automobile will be evaluated to determine its current market value. Since a new car starts depreciating the minute it leaves the parking lot, it explains why people raise eyebrows when they get results after automobile evaluation. However, there will be no more surprise as you are also going to learn some of the factors that lenders consider when determining how much a car has depreciated from the time of purchase.
The first thing that a lender is going to consider is the make and model of your automobile. In this case, two elements come into play: safety reputation and vehicle reliability. A brand that is more likely to sell in the market without any issue is considered to maintain its value better than others. However, a brand that is not likely to sell may not retain its value by a significant percentage. Typically, deprecation is going to take a toll on its value. When the car is evaluated, its current market value may leave the owner surprised especially if he does not know the factors that have been considered to arrive at a conclusion.
It is also true that the more a vehicle is popular in the market, the more it is likely to sell as a used car. Therefore, lenders also consider the popularity of your car to determine whether it can sell in the event you fall behind with your loan payments. In essence, automobile brands that are more popular in the car industry are more likely to hold their value better than the rest.
In this case, the value of your car is determined by how much you have driven it. Driving your automobile more decreases its worth. Therefore, if you have driven more and you are planning to apply for an auto title loan, do not be surprised when you find out that your car is not worth what you thought in the first place. Lenders usually have personnel who specialize in car evaluation to determine its worth. They can also send you for car inspection. The inspector will be able to tell the worth of your car by checking the odometer. If it reads more miles, it has little worth.
It is worth noting that if your car has been involved in an accident and has rusts and dents, it is likely to have little worth to the lenders. This also applies to automobiles that have been salvaged. These automobiles are considered of little value because the damages that they have make it hard for them to sell in the market.
This refers to car maintenance. If you have maintained your car well enough, then you are likely to have an easier time selling it. Poorly maintained vehicles are likely to have damages such rusts and dents, which make it hard for them to sell. In addition, the place where you intend to sell a vehicle may also affect its value particularly if the car was designed for a certain weather condition or terrain. A 4×4 automobile meant for the countryside may not have much value in the city.
Calculating auto equity for the title loan
As the lender evaluates your loan application, they will do their level best to determine the accurate value of the car being offered as collateral. On that note, a good number of lenders are not going to offer you anything above 50% of your automobileâ€™s equity in cash. This is because they need to ensure that they can repossess your car and sell it a profitable value (to clear the debt) in case you default.
Therefore, if you want to personally take the initiative of determining the current value of your automobile, these are some of the factors that can help you make the right estimation. They will give you an idea of the equity of your carâ€™s title if you seem to be in the dark. As such, you will be able to make the right choice before applying for an auto title loan.