Easy money. The biggest advantage of cash car title loans, or car title loans, is that you can get cash fast. These are the fastest turnaround time for loans. Often times, you can have your money within days of your agreement. This is because the car cash loan process is very simple. The lender just has to appraise your car and then tell you how much it will give you. If you accept, that’s it. You will have your cash within a day or two from most places.
Easy eligibility. Anyone with a car is eligible for a car cash loan. Your car is used as collateral for the loan. Similar to borrowing from your home, you borrow money from the value of your car. Lenders typically allow you to borrow up to 50 percent of the value. This is so that they can still get their money back in case you don’t repay the loan.
No credit is needed. Another big part of cash auto loans is that your credit doesn’t matter. Since you’re essentially making a pawn agreement, they are guaranteed in case you don’t. Anyone can get a cash car loan this way, because your credit history won’t affect your chances of getting the loan you need.
Disadvantages of cash car title loans
You can lose your car. If you don’t, there is a very real chance that your car will be taken away as payment. Even if you are late one day, they can take your car. Once this happens, you will never see that car again. As with any loan that is collateralized, you always run the risk of losing that asset.
High interest rates.The interest rates on a cash car loan, or a cash car title loan, are astronomical. They might say it’s only 20 or 25 percent, which at a time when you need cash quickly, you may be willing to pay. However, most cash car loans are one month loans, that’s it. That means you’re looking for the equivalent of a 300 percent annual percentage rate (APR), which is outrageous. Imagine signing up for a credit card with a 300 percent APR. There is no way you can do it. Some states have, or are trying to pass, laws that make it illegal for auto cash loan lenders to have hundreds of percent APRs. Other companies have limits, But cash auto loans avoid current laws. Lenders are supposed to tell you the interest rate in terms of APR, which is the annual interest rate. Remember, if it is a monthly fee,
Loan rollovers. As said before, these are often one month loans. Considering that many people who obtain these loans have bad credit, it is likely that they will not be able to pay it back as quickly. This causes what is called a renewal period. Interest rates skyrocket during this period. This then turns into actual or possible repossessions for your car. If you are considering this loan, make sure you can pay it off in the allowed time period. When you sign their name, you are giving them your title and usually a copy of your keys. If you don’t pay, they have every right to take your car from you. In some cases, lenders installed GPS systems and then remotely turned off the cars of those who did not pay on time.
Extra fees. There are many upfront fees, like a processing fee and document fees, that add up. Some are fixed fees, regardless of the amount of your loan. If you’re only borrowing a little, you may have to pay hundreds up front.
Cheated. The deception of cash car loans is that you can get cash very quickly. However, as soon as you get it, you need to return it. You need to weigh the risks before getting involved. Plan ahead to make sure you have the money to return it, or else you may run into some real issues.