Car collateral loans are much easier to get approved for than most people think, and it doesn’t take long at all to qualify. It turns out that these loans are quite popular, as it’s become more difficult to get emergency cash unless you have some form of equity or security backing up the loan amount.
Borrowers have turned to collateral loans for decades now, and it’s not just your car or truck that can be used with Highway Title Loans near me. Think about how often people tap into their home’s equity to get money, and you’ll realize the potential for a loan using your car’s title.
How Do Car Collateral Loans Work & How To Get One
These loans are great for someone who needs cash quickly and doesn’t have the time to wait days or weeks with a typical personal loan lender. They’re also ideal for a borrower who can’t qualify for an unsecured loan because of a bad credit score. Instead of relying on your credit history, a car collateral loan allows you to borrow against the available equity that exists in your vehicle. This makes it easy to borrow upwards of $10,000 and lenders are on board for fast underwriting because there’s equity or “security” backing the amount they lend out. They know they can turn to this equity if anything goes wrong and you default on the loan obligation.
To qualify for an instant car collateral loan, the vehicle used as security must be fully paid off and have a clear title in the borrower’s name. The loan value on the car will determine how much money can be borrowed, with most lenders offering up to 50-70% of its worth. The funding amount will often be much more than a normal personal loan because it’s fully backed by your equity.
The loan terms usually range from 1 to 4 years, with interest rates typically higher than traditional loans due to the added risk for the lender. It’s important to note that if payments are not made on time or if the loan is defaulted on, the finance lender has the right to repossess and sell the collateral (in this case, your vehicle) to recoup their losses.
Why Choose A Loan With A Car As Collateral
As for why someone would opt for a car collateral loan, it’s often pretty straightforward. Most borrowers often have little to no chance of being approved for a traditional, unsecured personal loan. This often occurs because their credit score isn’t in good standing or they simply don’t have enough of a credit history to qualify. So instead, they use the equity in their car as a way to secure funding and get emergency cash when it’s an utmost need.
Another benefit is that these loans can offer more flexible repayment options than other types of loans. And since the money is backed by collateral, it’s often easier for borrowers with bad credit or thin credit files to get approved for larger amounts than an unsecured loan.
Before getting a car collateral loan, it’s always important to research and ensure you fully understand all terms and conditions and thoroughly read through the contract and state laws regarding title collateral loans in your state. Also, make sure to only borrow what you can afford to pay back and always make your payments on time to avoid losing your car or further damaging your credit. Overall, a loan with a car as security can provide quick access to funds for those who otherwise may not qualify for traditional loans. Still, it’s important to be responsible and familiarize yourself with the terms before taking out the loan.
Different Types Of Collateral Loans
It’s important to note that cars aren’t the only collateral that can be used for loans. In fact, there are several options out there:
– Real estate
– Stocks and bonds
– Equipment and other valuable items
Essentially any item with value can qualify for a collateral loan. By far the most popular these days is your home, as millions of people pull cash out of the properties each year in the form of a home equity loan. These types of loans have lower rates than car title loans as the equity in a house or condo is far more reliable than what’s available from a car or SUV. Other types of collateral loans are less popular and you will generally get less cash when you pull out equity from jewelry or construction equipment that’s fully owned. Also, don’t forget about boats and RVs. These are treated differently than auto title loans as the equity amounts are often smaller and therefore, the funding amount will be less than what you expect with a vehicle title loan.
How To Get A Collateral Loan Near Me
If you’re interested in applying for a car collateral loan, start by checking with your local banks and credit unions. They may offer these types of loans or be able to point you in the direction of reputable lenders. You can also search online for title loan companies that are licensed to operate in your state.
Highway Title Loans offers both car title loans and pink slip cash advances. It’s also important to note that some states have laws limiting the amount a lender can charge for interest on a car collateral loan so be sure to educate yourself on those laws as well. Ultimately, it’s important to take your time and choose the financing option that not only works for your budget but also limits the risk you take on. Contact us today to find out how much you can borrow with your car’s equity!
Janet Patterson is VP of Marketing Communications for Highway Title Loans and the feature editor of its Lending Blog. Janet has worked in the financial service industry for over a decade, with 7 years of experience in the car title loan industry. She previously managed a customer service team that helped and advised consumers on all their lending related questions and concerns.