When you need immediate cash for a life emergency, you ask your friends what to do. If they don't have some money to help you, they often suggest you go for either payday or car title loans. A payday loan is a risky business for both lender and the borrower. However, a car title loan seems quite appealing because it's a secured loan. You know that you are putting your car title in the hold of your lender. You remain accountable for this financial choice and pay back your loan on time. But before getting into this financial contract, you may like to know how much you can borrow with auto title loans. If you are looking for an answer to that question, then it's time to find it out.
How Much Do You Borrow Against Your Car?
The loan amount you get from a car title loan is very much dependent on your car value. You can get the loan, no matter if you own a new or old car. To know the fair market price of your vehicle, the lender will ask you to take your car to a reputable store where an expert will check its condition and determine the exact market price.
According to FTC, a borrower can get 25-50 percent of its car value in the form of a loan. On Average, you can get $200-$5500 from this loan. However, many online auto loan lenders are trying to grab the borrowers' attention by offering them a loan of $10,000.
So, it would be best if you had an idea about your car's market value as it helps you determine what amount you can borrow against your car title.
How Much Are You Going to Pay?
When it comes to repayment, then you should know that a car title loan is short-term lending. You can pay back in two different forms. One is a lump-sum amount that you can pay 30 days after getting the loan, and it includes both loan amount and interest. As you are paying back quickly in one month, therefore you don't have to pay much for this kind of loan.
On the other hand, when you are not in a position to pay back quickly, you can go with flexible terms of three to six months. It's good to know that a car title loan is an expensive secured loan. Your monthly installment of loan doesn't just include loan portion and interest but also some fees or charges related to your investment. Some costs related to auto title loans in California are processing fees, title fees, key fees, document fees, etc. These fees top up your monthly installment with up to $25 on average.
Go for It, only When you Can Afford it
Car Title loans have many benefits. You can apply online and get loan payment within a day or two. You can get an instant approval for all types of credit; it means the loan is available for people with bad credit. A fixed interest rate is charged on this loan, so you don't have to worry about fluctuations in your monthly installment over time. However, when taking into consideration this loan, make sure you also look into its drawbacks. An online lender holds your car title; if you don't pay him back, he can repossess your car. Go for this loan option, when you think you can keep up with its monthly payment.