Understanding The Most Important Terms Used In Auto Title Loans Before Signing For OneFast Action Finance SEO
Do you need some urgent cash to sort out an emergency? We all find ourselves in situations where we need cash urgently to sort an immediate need but we don’t have the amount. Applying for a loan is one way to acquire funds and repay later. You should always try and find alternative sources of money before you can settle on getting a loan. You can try borrowing relatives or friends first. If other avenues to acquire cash are not successful, you can apply for auto title loans in Mississauga from trusted lenders.
A car title loan is where you use the title of your car as security to apply for a loan. All you need to have is a lien-free car title and an ID. The lender takes possession of your car title while you get to continue using your car as you repay your loan. It is a great way to get some quick cash to sort out your temporary money issues but you need to understand that the overall value of your car sets the boundaries on how much you borrow against it.
One downside to a car title loan is that your car gets repossessed in the event you are unable to clear your loan. This usually happens because people do not take the time to understand the terms that come with applying for car title loan. They then end up having these additional costs that are involved and it becomes hard for them to clear out their loans on time. This article will highlight some of the phrases used in a car title loan agreement and what they mean.
This is the term used to refer to the time set to pay back the loan. Usually, most car title loans take 30 days to be repaid back. You need to agree with the lender on the amount of interest to be paid on the principal amount. In the event you are unable to repay your loan after 30 days, you can ask your lender to set up a longer loan time.
The lender will work out the interest based on the timeline you are to pay back. The longer you take to repay your loan, the more the interest charged on the principal amount. You need to work out which option works best depending on your budget. It is better to avoid longer loan terms to avoid paying more interest.
Interest-only payments are offered on loans that take more than 30 days to repay. A lender can extend your loan term to 90 days and during this time you are required to pay interest only for the first two months. You are then required to pay up the principal amount plus the remaining interest amount at the end of the third month. The advantage to this agreement is that it gives you enough time to come up with cash to repay your loan. The downside is that you pay more interest on your loan. This is better than being unable to repay in 30 days because this affects your credit score. It becomes hard to acquire a loan in the future with a bad credit score.
Some lenders require one to take add-ons as a requirement to qualify for a loan. They may ask you to get a life insurance. This way, they are assured that they will get paid their cash if something were to happen to you. Others insist on breakdown insurance. If your car breaks down during a loan term that reduces the initial value of your car. But, if you have breakdown insurance, the lender is able to recover his whole amount if he repossesses your car.
If you clear your loan in 30 days, you have the option to take out the same loan again for the same loan term. Some lenders allow borrowers to roll over the loan as many times as they like as long as they pay back in time. Other lenders have a limit on the number a borrower can roll over a loan. Rolling over is a good way to finance some projects but then that means you have to keep paying interests and other additional fees.
Early repayment penalties
There are times you’d think that by paying off your loan early you will cut back on interest charged. Well, this is not usually the case with car title loans. Most lenders do not divulge this information freely and so you have to be very keen when going through your paperwork before you sign.
Each state has laws that limit lenders the amount of interest they can charge on title loans. Some states have a Usury law of 36 percent APR.
This is a legal document that allows your lender have a stake on the collateral given. If you default on the payments and you are unable to pay back your loan, then the lender has the right to sell your car and keep all the cash.