Is A Car Title Loan Similar To A Pawn Shop?
In some ways a car title loan is similar to a pawn shop, but they do vary with two important differences. One major difference is with what items can be used for collateral and the other is how the collateral affects your daily life.
Car title loans are loans taken out against the equity of your car or truck. Depending on the condition of your vehicle, the year, make and model, you will receive a loan based on the fair market value. You can look up your car's value with the Kelly Blue Book to have an idea of what will be the base of your loan. The title loan shop will have an assessor A fraction of the loan amount will be offered to you as your loan. The title of the vehicle is the collateral to your loan. If you do not own the title or at least almost own, (as with some title dealers), you will not be eligible for the loan.
Pawn shops will use most household items, appliances or personal belongings with value as collateral for their loans. You could pawn jewelry, watches, TV's or even gaming systems. As with car title loans, the loan will be based on the value of the item, but only a fraction of that value will be loaned. There will be a person at the shop who will determine this amount.
The largest similarity for a customer to focus on and understand is that the loan obtained from these places is only a fraction of the value. The lender will have the full value of the collateral to sell and get the loan amount and any fees returned to them plus the difference as additional revenue. Be careful with these types of loans if you do not want to possibly lose ownership of the item.
A pawn shop will take the item and store it for the loan term. If you are given 30 days to repay the loan, you will be able to claim that item back. When you pay off your loan, you will have bought your item back and will be able to return home with it. Because pawn shops take the actual collateral item, the customer will have to do without during the loan period. If you try to buy the item back after the term is up, you will be paying a much higher price for that item. Remember, once it becomes property of the pawn shop, the dealer will increase the sale price of that item to regain lost money from the loan.
A car title lender runs their process differently. When you bring your car in for a title loan, the dealer will only take possession of the title. The piece of paper will be what is stored in the back, not the vehicle. The borrower will be able to continue using the vehicle for the period of the loan. This type of loan is more convenient for many. Giving up a car could affect everyday life, especially getting back and forth to work. If the borrower defaults on the loan, the car will be repossessed and sold for a higher price. The new price will be more equivalent to the fair market value in order for the lender to regain the loan amount with fees and pay for the inconvenience of having to resell the vehicle.
About the Author
Approved Money Center Car Title Loan is a source for extra cash when you need money in a hurry. These loans are not for every budget need, but may be one more option for you to examine whie planning your budget relief. Visit http://www.approvedmoneycenter.com to find out more on title loans.
Tell others about
this page:
Comments? Questions? Email Here