A payday car title loan is the same as your regular payday loan wherein you borrow money from the lender, but you have to repay it in a short period of time. The difference of the payday car title loan is that the lender wants to have that security of their money; the car would become the collateral.
The Duplicate Key: Biggest Disadvantage
Also, the borrower or the car owner would have to give a duplicate car key to the lending company because in time of non-payment, they could just take away the car from the borrower's property. The lenders could then have that option to sell the car at a price usually higher that had been borrowed. This is because the amount of money that could possibly be borrowed from the lender is only at the maximum of half the car's market price. Probably, this is the biggest downside to this loan.
Requirements You Need to Accomplish
Like most loans, payday car title loans also have prerequisites. You must have no outstanding balance due with your car, and you must have a clear proof of ownership of the car like its title.
Benefits You May Enjoy
The good thing about this type of loan is that it is not really strict with the credit standing of the borrower. Even a person who is facing arrears, defaults, CCJ, and IVA could be taken as a borrower. It is also very easy to have your money. The process would is much instantaneous. After approval, the money would then be transferred to the borrower in just a few hours. The approval and releasing of the loan is much faster because lenders had found no risk with this loan.
This loan had presented similar pressure with the regular payday loan borrowers; sometimes the borrowers could not pay them on time, so they would avail of a refinance so as to cover the remaining balance with the loan. But then, interest rates would go up, and the borrower would be paying a higher amount than what they originally borrowed, of fear that they might lose their car.
Obtain a Title Loan
If you find that payday car title loan takes a lot of risk, an alternative would be to instead get a title loan. This loan would only possess your car upon non-payment, but the good thing about it is that the lender will not sell the vehicle. They would just wait for the borrower to give back the amount with interest rates. This would include the regular flat rates plus the repossession fees.
Although the payday car title loan is a bit riskier, it really is a life saver. It would provide you with that money that you urgently need. You'll just have to make sure that your financial situation could pay them; otherwise, you'll be saying goodbye to one of your precious belongings: your car.
