How Car Title Loan Works and Its Risks

It really pays off when you invest on properties with great values. You can actually depend on them during times of financial shortcomings. You can either sold them or make them as working insurance when applying for loans. One of the properties you can put on a collateral basis is your car. This is called a car title loan. You will submit your car’s title for a certain amount of cash and you will get to have it back after paying off the amount borrowed including the interest.

Car loans seem so good to be true. They are effective means of getting money but very risky to try out when you are not certain about your financial status. You can lose your most valued car through car title loans. In fact, most of the cars transacted on this type of lending money are never returned to the owner. They are repossessed by the lender because of some delinquencies in paying the amount due.

The car’s value is only 50% of its original price if you will apply for a car title loan. This means that the lending institution will give you the amount of $7500 if you originally purchased it at $15000. Some are even accepting at 30% only. However, this depends on the model of the car for there are types which increase in value the longer it has been released. Examples of this are the vintage cars and pick-ups.

This type of loan comes also at higher interest rates compared to others. More lenders are investing on this since they can really profit on this business. Come to think of this; a repossessed car worth $7500 can be sold by the lender up to almost the original price which is $15000 plus the payment collected already prior to repossessing the car. The lender has gained too much while the borrower is left with no car. This will be a big loss especially if you have worked so hard for that car.