When you need to raise funds quickly for an emergency or unexpected bill, loans are often the only option. If you own a car, you may be able to get a title loan on the vehicle. The following answers can help answer your questions so you can decide if this is the right option for your needs.
Q: Must you own the car outright?
A: Yes, the car must have a free and clear title in your name, which means you don't have any outstanding car loans on the vehicle.
Q: Will you lose the use of the car during the loan period?
A: No, you will keep the car for the duration of the loan. The lender will take over the title during the loan period. They may also request a key to the vehicle. Once paid back, the title will revert back to you.
Q: How much can you borrow?
A: This depends on the value of your car. Typically, a loan specialist will inspect your car's condition and then check the value of the car. You will receive a percentage of this value. Different loan companies may offer higher or lower percentages. There may also be local regulations in place that limit the amount of the loan.
Q: Can you borrow the entire value of the car?
A: No. The amount you are lent will be less than the car's value, since the loan company must be able to sell the car and recoup their loss if you default on the loan.
Q: How long do you have to repay the loan?
A: Once again, this differs by state and loan company. Generally, the loans have short repayment terms, so you may need to repay it within two weeks or 30 days. Some lenders allow you to renew the loan terms by paying the interest-to-date on the due date. There will be a new interest fee assessed on the renewed loan.
Q: What happens if you default on the loan?
A: The car will be repossessed by the lender if you default on the loan. Depending upon the lender, local regulations, and your contract, the car may then be held in an impound lot for a set period, giving you a chance to retrieve it. Generally, you will need to pay the outstanding loan and interest amount, along with a towing and impound fee. If you fail to do so, the car ownership reverts to the lender and they will either sell it or auction it off. To avoid this, contact the lender before a payment is past due to see if you can renew your loan or work out a new repayment schedule.
Contact a company like Nekoosa Cash Advance LLC for more information.