Car Title Loan Or Pawn Shop?
Did you ever pawn an item at a pawn shop? The theory is that you hand a valued item over to a pawn broker, have it appraised, be granted cash, leave the item at the pawn shop and hope that you can retrieve the valued item at a later date. If you are unable to "buy back" the valued item by a certain date, the pawn broker will sell it. The valued item was collateral to cover the loan in case you defaulted and is perfectly legal to sell if you don't pick it up by the date detemined by the pawn broker. It's different with a car title loan, though.
An automobile is one of the most valuable items that any consumer can own. How can a pawn broker make a loan on a car? The pawnbroker cannot keep the automobile on display in his shop and the automobile is needed by the consumer to go to work, run necessary errands and get by day-to-day.
An automobile represents a "freedom" to the consumer. There is also the risk of storing the automobile; the pawn broker would assume enormous costs to insure the storage of the automobile, let alone the cost of the storage space that would be needed to do so.
The idea of collateral is similar, however. The car title lender only stores the title of the vehicle and the borrower still has full use of the vehicle. The title of the vehicle will be released to the borrower upon the full payment of the loan, including all interests and fees. If the borrower is unable to repay the loan, the car becomes the property of the car title lender and will be sold as payment for the loan.
The pawnbroker or car title lender has the innate knowledge that as long as he is in possession of the "title "of the vehicle, he does not need the vehicle itself. The borrower merely needs to sign the car title over to the pawnbroker or the car title lender and the vehicle becomes collateral. This is a big risk to the borrower for his instant cash.
Obtaining a car title loan is simple. There will be no credit check and the consumer need only to own the vehicle outright having no other liens to any other creditor. In addition, the borrower needs to be 18 and have a viable income. After the vehicle is appraised and inspected, the consumer relinquishes an extra ignition key and the actual car title (not a copy), of the vehicle to the lender and his instant cash is granted.
The loan is usually granted for 30 to 60 days after the paper work is signed. The value of the vehicle is an important factor as to the amount of cash granted. The lender will usually give an amount from 25% of the bluebook price to 70% of the value of the vehicle to the borrower and the borrower will have the cash within 24 hours. The interest on these loans will vary from 25% to 650%. This type of loan could easily become an endless cycle of debt to the borrower, if the borrower is not responsible, or if the borrower signs the loan papers in haste without educating him or herself, as to the total cost of the loan.
About the Author
Texas Auto Title Loan is a great option for those who need fast money. TATL is state regulated following all rules and regulations. Visit http://www.texasautotitleloan.com to find out more on title loans.
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