What are Used Car Title Loans ? A title loan on a vehicle is a loan in which the equity of the vehicle is used to get a loan. Some loans can be short term or they may be a longer term. Title car loans are sometimes a good solution if funds are needed quickly, or if a bank is unable to help out in a time of need. Usually a car title loan can be processed very quickly and funds be made available or debt incorporated into the title loan.
How exactly do used car title loans work? When you own the vehicle and have a major portion or all of the car paid for, then you have equity. You may still be financing the vehicle and may not have all of it paid for yet, however you might still have usable equity in the vehicle. Example: You bought a new vehicle for $40,000 and still owe $10,000 after 2 years and the vehicle value is still $30,000, then you would have $20,000 in equity. It may possible to get a car title loan for $30,000. The old loan with $10,000 remaining would be paid out by the new car title loan financing company and the new loan
Used Car Title Loans Requirements.
In order to qualify the car, truck, SUV, van, or other vehicle used to get a car title loan, are usually eight model years old or newer, are either lien free or have been paid down by at least 25% – 50% of the current market value . The banks and lenders require that the vehicle must also have full insurance coverage including, fire, theft and at fault accidents. No rebuilt vehicles are allowed by lenders, and do not qualify for a Title Car Loan. The lenders and banks use the vehicle as collateral on the loan, and written off or rebuilt vehicles are very undesirable by consumers, or dealers. You must be the registered owner and have the registration in your name only. If you and another person are on the registration, then you must both sign off on the title loan. The vehicle must be drivable and deemed mechanically safe, parts vehicles, very high kilometer vehicles, or vehicles that are not mechanically fit do not qualify. A quick mechanical assessment will be required in order to finalize a car title loan. A Car Fax report that will show any previous collisions, liens and some servicing intervals. These requirements are usually performed by the Car Title Loan Dealer and included in the financing charges and or fees.
Used Car Title Loans Good or Bad?
When looking at your options to do a Car Title Loan or not, there are several thigns to take into consideration. There are many good things about a Car Title Loan. One good thing about getting a car title loan in Edmonton, is that getting a car title loan approved is usually very quick and easy. The owner still gets to drive the vehicle while paying back the loan. Very low and competitive interest rates in comparison to a regular car loan . Funds are usually accessible within a very short time. Banks usually take many days to approve any type of loan and they may not accept you or approve you in the end. Car title loans can be an excellent way to get money quick if there is an emergency, but should not be treated as a long term solution for a short term problem.
There are usually many flexible terms when deciding on how quickly to repay a title car loan. The quicker it is paid back the less interest will be incurred. Its best to get the principal paid off as soon as possible, and many car title loans can be paid out sooner without any penalties. Make sure you understand your contract interests rates, terms, and options to pay off early.
Many provinces across Canada have put out new laws regarding lending rate rules for a car title loan. This protects the people who are taking out title loans on their own vehicles.
Car Title Loans can be a bad thing if you get into debt to far and cannot afford to pay the loan back. The lender can always repossess the vehicle if the loan has gone into arrears and into collections. To avoid this make sure you are comfortable and aware of what you are committing to.
Will a Vehicle Title Loan Improve My Credit?
Yes a car title loan can really help to improve your credit. Your your credit score will increase with every payment that is made, and the credit bureau will report the changes on a monthly basis. It usually takes several months of consistent payments to bring the credit score up a lot. Make sure you the lender reports the payments to the credit bureau of Canada, because not all lenders will report payments. Make sure not to skip miss any payments, and always make payments on time. Check out the payment calculator here to estimate payments.