Understanding Auto Title Loan TermsFast Action Finance SEO
Most people find themselves in a position where they need cash urgently to sort immediate needs and they don’t have the amount then. One way to acquire quick funds is to borrow with your car. This type of loan is known as an auto title loan or a car title loan. Whether your credit report is good or bad, that does not affect a car title loan since you use your car as security to apply for a loan.
All you need to apply for an auto title loan is an ID, insurance and a lien-free car. Once you get the loan from the lender, you still continue to use your car as you repay your loan. How much you can borrow depends on the overall value of your car. If you are a first time borrower, there are auto title loan terms that you need to familiarize yourself with before you start comparing different offers from different lending companies. Common loan terms you will encounter include:
This term refers to the time you are supposed to pay back the loan. Unlike traditional loans, car title loans have a shorter loan term and the interests are a bit higher. This is why it is very important to apply for a car title loan only when you need cash for emergency expenses. There are lenders who are flexible and willing to negotiate the loan term with their customers in order to allow them to pay back the loan without too much pressure. However, the longer you take to repay your loan the more the interest you will be charged on the principal amount.
Some lending companies require their customers to take add-ons in order for them to qualify for a loan. Add-ons may include you to have breakdown insurance on top of the normal car insurance. Why is this? As mentioned earlier, the value of your car determines the loan you can apply for. In case of an accident, whether major or minor, the value of the car definitely goes down. If you have a breakdown insurance cover, even if you get into an accident, the lender is assured that they will recover their whole amount in the event you are unable to pay your loan and they have to repossess the car. Different lenders require different add-ons. So, it is important to find out about what add-ons may be required by the lender of your choice.
Sometimes circumstances change and one is faced with emergency expenses. This is something that can affect anyone at any time. In the event you are unable to make your monthly loan repayments, you can talk to a lender to negotiate your terms of repayment. Lenders do give borrowers the option to make interest-only payments. This option allows borrowers to pay only the interest on their loans until they come up with the cash to repay the loan. The only downside to this agreement is that one ends up paying more interest on their loans than they initially expected.
Just like any other type of loan, a borrower has to sign an agreement with the lender when applying for a car title loan. A lien is the document that a borrower has to sign agreeing to the terms of the lender. Once a borrower signs a lien, the law gives the lender the right to sell a car if the borrower defaults of many payments. As mentioned earlier, in case you get into a problem, you need to discuss with your lender and allow them to give you better terms of repayment to allow you to make payments without too much strain. You can work with your lender to avoid repossession.