A history of poor credit may present an obstacle to getting an unsecured bank loan, but it may still be possible to get a loan against car title approved. Using a vehicle as collateral for a bad credit cash advance leads to credit approval because it is a loan with no credit checks at any stage. Far more people are opting to pawn a car when they need fast cash because the provision of collateral allows that customer to borrow more than would be the case with an unsecured same day payday loan. An immediate cash loan may even be available if there is some outstanding car finance on the vehicle.
Who is Eligible for a Loan Against Car Title?
- Each U.S. state has very specific rules and regulations. Whilst it isn’t legally possible to get a car title loan in many states, others have a maximum interest rate limit to protect borrowers.
- Whilst it is always necessary to be a minimum of 18-years old, some lenders require their customers to be over the age of 21 before entering an agreement. Default rates are far higher in the lower age categories.
- Full-time employment is clearly desirable, but this isn’t always a requirement for a bad credit cash advance. The lender will still require proof that the loan is affordable and can affordably be repaid.
- A minimum of 75% of any outstanding car finance must have been cleared to pawn a car. The higher the figure, the higher the acceptance rate.
- The customer will be expected to provide the lender with a copy of the car title, two forms of identification and a duplicate pair of car keys.
How to Pawn a Car for an Immediate Cash Loan
In order to get a car title loan, it is necessary to have that vehicle professionally valued. It is normally possible to benefit from a bad credit cash advance for 30% to 50% of the cars value. It is capped at this level for two reasons. Firstly, it ensures that there is sufficient equity to cover any interest that will accrue. Secondly, a number of customers either choose, or have no option but, to renew their agreement. The maximum borrowing term is normally 30 to 45 days because the APR is high in most U.S. states. It typically costs $20 to $25 to borrow $100 for a 30-day period.
Consequences of Defaulting on a Bad Credit Car Title Loan
The lender requests a pair of car keys when taking out a loan against car title because it enables them to easily repossess the vehicle in the event of default. The car will then be sold for fair market value at an auction. Should there be a shortfall, the customer is liable for any difference. Subject to valuation and the amount borrowed, it may be possible to renew the agreement. In Oregon in 2012, a staggering 19% of all those who chose to pawn a car renewed their agreement at least 6 times. This provides that person with sufficient time to clear the outstanding debt, but it also means that more interest will accrue.