Understanding Loan Limits For Vehicle Title LoansFast Action Finance SEO
Most of us have been approached by money lenders who encourage us to apply for loans promising to give special interest rates. You may have had a call from your bank manager introducing you to a new special package they are offering to loan applicants and it all sounds great. One thing they don’t tell you is the many processes you have to undergo before they actually sign off your loan application.
Usually, lenders have to scrutinize your financial statements and history to check if you are credit worthy. They have to check if your credit score is good or bad based on your promptness to pay your previous loans on time.
This takes a lot of time and if you happen to have a bad credit score, a lender can choose to decline your loan application. These are processes you have to undergo when applying for most traditional loans. If you have undergone such an experience before, then you will be glad to know that there are better ways to apply for a quick loan.
Car title loans are not widely advertised and not so many people are aware of this type of financing. A car title loan simply means you use your lien-free car title as collateral to get a quick loan. Even with a bad credit score, you still qualify for a car title loan as long as you own a fully paid vehicle in your name. The lender then works out a loan limit for you and after coming to an agreement; the lender retains your car title until you repay your debt.
Loan limits for car title loans
You are probably wondering how much money you can apply for in a car title loan. First of all, the lender will ask details about your car to be able to calculate the amount you can apply for. They will need to know the make and model of the car and the year of manufacture so that they can work out the current market value for it.
Second, they will need to know if you have insured your car and how regularly you have it serviced for them to establish its working condition. It helps to have your car regularly serviced at renowned car dealers to assure quality servicing.
After a lender has established that a car is in good working order and they have the current market value, they then calculate your loan limit. Different lenders use different methods to calculate car title limits. Some lenders offer a limit between 25% to 50% of the car’s current market value. For example, if a lender offers 50 percent for a car worth $5,000 then you qualify for a car title loan worth $2,500. Some lenders are willing to offer borrowers more than the worth of the car which rarely happens but possible. You need to approach legitimate lending companies which have established their name over the years.
How to avoid high interest rates
Reputable lenders will sit down with you and carefully take you through terms for applying for a car title loan. Be careful to read through the paperwork to check for any hidden charges that may be required of you. Some lenders may require you to get a life insurance before they can approve a loan. This way, they are assured that in case something happens to you they still get their payment on the loan. You should never shy away from negotiating the conditions of your loan term. Basically, most car title loans take 30 days to repay but you can always ask for a longer loan term.
However, you need to understand that the longer the loan terms the more the interest rate. In some cases, people have paid more on interest rate than the principal amount. It is always better to pay as soon as you can. Dealing with back door lenders can also lead you to very bad deals. Shady dealers only care about making profits and when you don’t pay in time they take the opportunity to ask for higher interest rates. Can it get worse? Yes, in the event you cannot pay your debt, you can find yourself with broken knee caps if you insist on these quack lenders.
When to apply for a car title loan
As you have seen car title loans are easy to apply and they do not entail much. You can consider applying for a car title loan when you need cash urgently more than your credit card can cover. Sometimes we find ourselves in situations where we have savings but something comes up and we find we need more than is available. One upside of a car title loan is that you continue to use your car as you pay off your loan so that means your life is not interrupted at all.