Facing a repossession is not the best position to be in when you are out there trying to make your payment on your loan. Some lenders, once you fall behind may be threatening you with repossession or may have repossessed your auto. If you’re in need of some quick cash to pay to get your vehicle out of impound and need an emergency loan, you may be wondering what your options are. If you, or your car, don’t qualify for a car title loan, or you don’t use your vehicle on a daily basis, online title pawn loans could be a great option for you. We are here to help.
Before we break down how repossession works with a car pawn loan, let’s go over what an online title pawn loan actually is and how to get one.
Simply put, online title pawn loans are quite similar to auto title loans. If you have equity on your lien-free car, you can get a short-term loan based on the value of your car and your ability to pay it back. Usually with a title loan you get to keep your vehicle while you make your repayments. That way your vehicle is at risk of repossession of you miss a payment or fall behind in meeting your loan obligations by the due date.
The main difference between the two is that unlike car title loans, many auto title loans require that they keep your car during the term of your loan. That’s not the case with every auto pawn lender online, but it is quite common.
Much like a car title loan, title pawns are short-term loans. Typically, you’ll only have a few weeks to a month to repay the loan. Also like car title loans, interest rates connected to title pawns can be very.
While the interest rates are much higher than those of credit cards or personal loans, those are only available to individuals with good credit. If you don’t have great credit, however, car pawn loans do have lower interest rates than payday loans.
Since the amount of your online title pawn loan depends on the value of your car, you’re going to eventually have to take it to the actual brick and mortar institution.
At that point, a salesperson will do an in-person inspection to determine the vehicles value. Don’t worry, the appraisal typically only takes a number of minutes. After that, the salesperson will give you a loan offer based on the value of your car and the limits of the pawn shop.
If you agree to the terms of the loan, you’ll then share proof of income and proof of residence. Pawn shops ask for this information because they want to make sure that you can afford to pay back your loan. They also ask for your address because they are going to have to reach you if you default on the loan. To make sure you are eligible, make sure you have these to show to the employee of the pawn shop you are interested in working with.
If you do not have a job, other forms of income can include social security, retirement funds, work pension, trusts, and other forms of consistent income. You will also want to make sure that title pawn loans are available in the state that you live in, they are illegal in some states around the United States.
If you can pay off your loan in a timely manner, then the only price you will have to pay are the high interest fees connected to your loan. If you default on your payments, however, you could be in for a world of financial hurt. It is different than defaulting on other loans, though.
If you default on your loan, the pawn shop that you borrowed from will repossess your car to make up for the money that they’ve lost. Even if the lender doesn’t hold onto your car during the life of your loan, it does get to keep your car for good if you end up defaulting. While the loan is always less than the value of your car, you don’t get to keep the difference if they sell for higher than the value of your loan. So, if you default on a $2,000 loan and your car is actually sold for $5,000, guess who gets to keep the remaining $3,000. That’s right, the pawn shop.
If you do default on your loan, you do have some options.
If you know that you are going to default on your loan, but have yet to do so, you can always contact the pawn shop and ask them for an extension. It is up to them whether or not they will actually offer one, but they may be able to modify the terms of your loan for an added fee. If you only need a few more weeks to pay off the loan, it is more likely that they will grant an extension or possibly refinance your loan. You need to make sure to notify the pawn shop before you default. The sooner the better.
Keep in mind that even if you do default on your car, and even if the pawn shop does repossess your vehicle, that doesn’t mean you have to say goodbye to it forever. Once your item passes to the pawnshop, they will likely put it for sale. You can then purchase the item back for its sales price. Buying the item back is likely going to cost you quite a bit more than the money you got from the loan, but if you come into a more stable financial situation, this is a definite option for you.
One thing to keep in mind about online title pawn loans is that even if you do lose your car due to a default on the loan, your credit score won’t be affected. You will no longer owe money on the loan because your car has traded hands, and nothing will be reported on your credit report This is one reason why title pawn loans are a good option for those who are watching their credit or have a bad FICO score.
Sure, if you’ve lost your car, your credit score remaining the same may seem like a small consolation prize, but it can definitely help you on your journey to a more financially stable situation.