Title Car Loans: A Look At How Much Money Is Really Available
When most people think of borrowing money, they think of banks
, with their long, drawn out application process, or credit card and payday cash advances, which come with exorbitant interest rates, hidden fees, and other threats to fiscal health. Auto equity loans provide another, more affordable option that allows borrowers to get the money they need quickly, conveniently, and affordably.
Title car loans use the equity in a car or truck to provide security to the lender, allowing them to offer lower interest rates. This is all done online, without hidden membership dues, fees, or prepayment penalties. While each company has their own policies regarding just how much they are willing to lend, and at what rates, most online auto equity loans are granted following the same basic principles.
What's It Worth?
Since the vehicle is used as collateral, the amount that can be borrowed is based upon the wholesale value of the car. This is called its 'fair market value.' In the United States, fair market value is defined as, 'the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." Of course, the valuation process can be rather subjective. Everyone wants their car to be valued as highly as possible, while the lenders want to minimize their risk. To avoid conflicts of interest on either side, vehicle valuation services, such as the Kelly Blue Book website, are used to determine a car's fair market value when applying for title car loans.
To determine the value of a vehicle, the year, make, and model are entered into the Kelly Blue Book website. Next, a series of vehicle attributes can be selected to better describe the car, such as power steering, power windows, braking system, mileage, and any major damage. This highly respected website even factors in the location of the car to provide a more accurate analysis which helps borrowers find the best auto equity loans for their needs.
Ratios, Rates, And Respect
Auto equity loans are issued based upon a company's loan-to-value ratio. This ratio is the percentage of fair market value that lenders are willing to offer. For example, 50% of a car valued at $5,000 would result in $2,500 being offered. Companies vary from place to place on this ratio, so it is worthwhile to shop around. Most firms will require that the vehicle being offered as collateral be no more than 10 years old and worth at least $2,500. Generally, proof of a clear title, identification, and insurance must be provided, as well as a most recent rent or mortgage statement, utility bill, and pay stub. All of these can be provided and verified online through secure websites.
In addition to the ratio, the interest rate being charged on title car loans must be compared to ensure you get the best deal. Also, watch for fees, mandatory membership dues, and other hidden expenses that can increase the overall cost; reputable lenders do not use these devices, so they should be avoided. Any contrivance aimed at taking your money unnecessarily means the lending company does not respect you and doesn't deserve your business.
Convenience & Security
Applying to borrow money of any amount means you must provide personal information. There are many online auto equity loans available today that can provide the security required to conduct business safely. Ease of use, fast approval, and reasonable repayment schedules should also be looked for when shopping online for title car loans.
Instead of borrowing money in the form of payday or credit card advancements, auto equity loans provide fast, affordable cash at reasonable rates. Many borrowers do not realize that the interest charged for payday advances, when calculated out over a full year, can result in interest charges that total several times the original amount borrowed. Would anyone choose to borrow $100, knowing they would have to pay back $500? Unfortunately, it happens every day. Credit card cash advances also carry hidden costs. They normally are issued at higher interest rates and with a fee, which is added to the balance owed. What many card holders do not realize is their payments are applied to purchases before cash advances. This can mean that a cash advance, held at a higher interest rate, can go unpaid for years, incurring more and more interest expense as time passes.
Title car loans, because they are backed with collateral, are able to offer reasonable rates and repayment schedules for the cash needed right now, without risking a family's financial future.
by: Chris Harmen
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