Do you need money fast but your poor credit score is keeping you from getting access to conventional short term lines of credit? Obtaining a car title loan is one of the best ways of getting your hands on some really fast cash with no requirements of credit check and income verification. It might sound pretty straightforward to you but there are times when such loans can lead a borrower deep into debt even sometimes leave him without a car.
Car Title loans – How do they work?
If you took some valuable or jewelry to some pawn shop, the employee on the other side of the counter would appraise the items and offer a loan based on the worth of the items. In such cases, the pawn shop will lend you money and will also charge you interest rates for it. When you fail to pay back the money within the agreed time frame, they seize the items. In a similar way, the car loan works.
The lending company will determine the price of your car and offer you a loan based on the worth of the car. The lending company will hold the title of your car until the loan is repaid. This is a short term loan which charges you a hefty rate and if you don’t pay back the money on time, you will have to sell off your car to the company.
What are the qualification criteria for car title loans?
Since this loan is entirely based on equity that you have on your car, most title loan companies will need you to own your car right away. In case you still owe money on your car loan, the title of the car is still in the hands of the bank and hence you won’t be able to use it as collateral to a car title loan. Few other things that are demanded are proof of income, residence proof and your age proof.
Read the fine print of your loan agreement
Driving your car to the title company to immediately obtain cash might seem to be simple but before giving a green signal to the loan, you should know what’s written in the contract.
- How is the interest rate calculated? And what is the time period for which the interest rate is determined? One more thing you need to remember is that since the car title lenders are in a separate category than banks and credit card companies, they aren’t subject to usury laws and hence they charge higher rates of interest.
- What are the penalties and charges for non-payment and late payments? Could a single late payment mean your car to be seized? Does that increase the interest rate of the loan?
- What sorts of mitigation rules are applicable? Do you need to go through mediation?
Although it may seem that obtaining car title loans in Missouri is an easy task, it may become intimidating if you’re not aware of the steps you take. Hence, consider the above mentioned details before taking the plunge.