People from all walks of life can experience financial trouble when an unexpected expense or a loss of income occurs. In these situations, term loans such as auto title loans can provide the answer you need in order to meet your financial obligations until you are back on your feet. If you are considering a car title loan to help you through a rough patch, taking the time to review the facts below can help you to determine if this is the right type of short-term loan for you.
Fact #1: You Must Own Your Vehicle Free And Clear
Since auto title loans require that a lien is placed against your vehicle in order to secure the amount of the loan, you will need to own your vehicle free and clear in order to qualify for this type of short-term loan. This means that no other liens can be active against the title of your vehicle. If you have any liens on your vehicle, you will need to have these liens removed before you are able to qualify for funding.
Fact #2: You Can Typically Keep Your Car
One of the reasons that many people are hesitant to consider car title loans is that they simply cannot afford to part with their vehicle even for a short period of time. After all, most people rely on their vehicles to get them back and forth to work each day and to run essential errands. If you have avoided auto title loans for this reason, you should know that most lenders will actually allow you to keep your vehicle while repaying your loan. The only time you will need to surrender your vehicle is if you default on the loan.
Fact #3: Your Loan Amount Will Be Based On The Value Of Your Vehicle
One of the biggest drawbacks associated with many short-term loan options is that value of these loans are often rather small. This is because most short-term loans are based upon how much income you bring in each pay period. Consequently, if you are dealing with a significant expense, you may find that the funds offered by options such as payday loans or pawnshop loans are just not sufficient. Auto title loans are different than these other short-term loan options. Since an auto title loan is a secured loan, these loans are able to offer you access to larger amounts of capital up to the current value of your vehicle.