A car title Loan works much in the same way as a regular installment loan. The difference is that the loan itself is secured against your vehicle. The lender takes the title of your vehicle to secure himself against the potential risk of you defaulting on your loan.

The meaning of a car title loan tells that it is possible for you to borrow a small amount of cash for a short period of time, against your car title. Here, the loan that you get is known as car title loan. In order to get this loan, all that you need to do is to pledge the title of your car to the selected lender. In that way, if you are looking for immediate cash now, the only solution to your problem is to opt for Car Title Loans offered by a reliable lender, like BHM Financial Group. This action will enable you to solve your crippling debts.

Car title or auto loans give you access to credit, which can typically be as much as 50% of the value of your car. Typically, because the car title loan is secured, a borrower can obtain a lending rate lower than that of an unsecured personal loan.

What if I Have Bad Credit?

If you have a low credit score then a car title loan is probably the easiest way to obtain a loan. Your weak financial profile is offset by the fact that the loan is secured, and as such, your application will appear far less risky to the lending officer who is reviewing your case.

Individual consumers suffering from either bad credit or no credit can definitely look into this as an option. In fact, no credit checks are carried out by the company offering this loan. If you are borrowing money, then the vehicle that you own is used as collateral. The funds that you get are considered as secured. The amount that you are looking for through a car title loan is determined by the lender after assessing the value of your vehicle.

Important factors that matter in securing a car title loan:

• Loan amount. The amount you can borrow will likely depend on how much your car is appraised for and the maximum loan amount set by the lender. Generally, you can borrow 25-50% of the value of your vehicle, with the value being determined after an appraisal.
• Loan term. Loan terms will differ between providers but can last anywhere from weeks to a couple of years.
• Payment flexibility. Find out if a lender lets you make payments that match your pay cheque schedule from your job. This might be weekly, bi-weekly or monthly. This means you can immediately pay off your loan and budget your income and expenses more easily.
• Making extra payments. Some lenders charge penalties or fees if you decide to make additional payments or if you decide to repay the loan ahead of time. If you can repay a loan before it’s due without incurring any additional costs, you can end up saving a lot of money in interest payments.

Benefits and drawbacks to consider-

Pros

• Receive your funds quickly. If you apply in person at a physical location, you can generally receive your approved funds almost as soon as you accept the loan’s contract. With online applications, lenders can transfer funds into your bank account by the next business day.
• Bad credit is OK. Since you’re providing collateral in the form of your vehicle’s title, you don’t have to have a good credit score. Lenders will be willing to lend to you because of the secure nature of the auto title loan.
• Better rates. Auto title loans tend to offer lower interest rates when compared to other unconventional forms of credit like payday loans and installment loans.

Cons

• Possibility of losing your car. If you aren’t able to pay back your initial loan plus the interest it accrues, the lender has the right to take possession of your vehicle. This could leave you in a much worse financial situation than you were in to begin with, so make sure you know what you are getting into before you sign the loan contract.
• High cost. While these loans typically come with lower interest rates than payday loans, they are still costly when compared to standard loans. Consider whether you can afford the repayments before taking out a loan.
• Disreputable lenders. Not all lenders are equally reputable and trustworthy. Compare different lenders in order to find the lowest interest rate. If you wind up choosing a dishonest lender and end up paying incredibly high interest rates, it can put you at risk of losing your car.

Things to avoid while getting a car title loan

• Taking on a loan you can’t afford. If you think you may have trouble paying off a loan in a timely manner, you may want to avoid taking it. If you don’t keep up your payments, you could generate more fees, damage your credit and possibly lose your vehicle, putting you in a worse situation than you were in before.
• Refinancing. If you can’t pay off your loan in the original term set out in your contract, the lender may allow you to refinance or roll over your loan. You’ll be charged additional fees and interest on top of your existing fees.
• Skimming over the loan offer document. Make sure you go through the terms and conditions of your loan carefully. This should give you a clear indication of how much the loan will end up costing you. If you don’t agree to the terms, you’re under no obligation to accept the loan.

General Eligibility criteria for car title loans:

• Be a Canadian citizen or permanent resident
• Be at least 18 years old, or the age of majority in your province or territory
• Have proof of a steady income
• Own your car outright, however some lenders may approve you for a loan if your car is almost paid off

Steps to apply:

• Go online or in person to a lender
• Provide your name, date of birth, address and email address
• Produce a valid form of ID
• Give details about your employment status and income
• Have your vehicle appraised

Apply for Car title loan at BHM Financial here.

The post Car Title loans appeared first on BHM Financial.