The car title loans are similar as it sounds. In this loan, you allow your car’s title as collateral for the loan from a creditor. For example, a traditional lending company, such as bank or other financial institutions may acquire your title as their collateral security. Some specific loans like the car title loans San Jose California are also available for providing you fast cash. Now, let us discuss how it works actually.
Purpose of Using the Loan: There can be various purposes for which you may use this type of loan. There can be instances where you want to use your car titles for the specific purposes. For example, there may be various outstanding bills piled up. You may need some additional cash to pay off within the next payment date, or you may have some emergencies to meet. In all the cases, you can use your assets for obtaining cash when you require.
Procedure of Obtaining the Loan: When you need money immediately, the car title loans can provide you with some fast cash with the minimum income verification with no check of the credit background. When you take jewelry or some other valuables in the pawn shop, the employee present in the counter will evaluate your items and will provide you loan accordingly. In this particular case, the pawn shop will lend you money and will also charge interest. If you cannot pay back the money within the specific time frame, they will definitely acquire your items.
In the car title loans, the lending company will evaluate the price of the car depending on the wholesale values and then will lend money according to the car’s worth. The company will hold the title of the car until you can pay back the amount. It is a short term loan with huge interest rates. If you cannot pay back the money within the time frame, it means you have actually sold out the car to the lending company automatically.
Qualifiers: As this type of loan depends on the equity, first of all you are required to own a car. If your car loan is ongoing and not fully paid, you are not the actual owner of the car. Therefore in this case, you cannot use your car for the collateral purpose. You will require an age proof, your income proof and your residential address proof for obtaining this particular loan.
Fine Prints and Instructions: The procedure may seem very simple while obtaining the loan. But you should carefully read all the fine prints and instructions before legally committing into a loan. You should fully go through the contract and look out for the following points:
- What are the penalties for the late payments? Are they going to take away your car if a single late payment occurs? If you are paying late, will the interest remain same or additional fees will be there?
- How the interest rates are calculated and for which time period?
- Are there any mitigation rules? Do you require a third party or you can directly file lawsuit against the lending company if it is required in the future?
When you need fast money, then the car title loans can be very useful. If you possess a bad credit score, but have a clear car title in your possession, you can definitely go for this particular car title loan. As this is a short term loan of small amount, it is also easier to pay back.
Author Bio: George Russels is a well known debt analyst working in a lending company. In this article he describes the procedure of the car title loans San Jose California and explains how you can qualify for this loan.