There are two main types of loans: secured and unsecured. The difference between these two types of loans is the former is secured by collateral, whereas the latter is not.
One common type of secured loan is a car collateral loan, which is often called a car title loan. Borrowers who obtain these loans use the title to their vehicle as collateral.
If you are in need of fast cash, a car collateral loan might be the solution. But before you start searching for “collateral loans near me,” it’s important to learn more about this lending option.
What Happens If You Don’t Repay Your Car Collateral Loan?
Defaulting on a loan is never wise, especially if it is a car collateral loan. Remember, you must use the title to your vehicle as collateral to secure this type of loan. This means if you are approved for a car collateral loan, the lender will put a lien on the title to your vehicle.
But the lender will not immediately take possession of your vehicle once you are approved. You can continue to use your vehicle as you normally would while you make payments to the lender.
If you successfully pay off your loan, the lender will remove the lien from the title to your vehicle. However, if you fail to repay the loan, the lender has the right to take possession of your vehicle to satisfy your debt.
How Much Will You Be Able to Borrow with A Collateral Loan?
The amount you are able to borrow through a collateral loan will vary depending on several factors. For example, the lender will take your monthly income into consideration when calculating how much you should be allowed to borrow. But the value of your vehicle is the factor that could have the biggest impact on how much you are approved to borrow.
The lender will calculate the value of your vehicle by evaluating its make, model, year, condition, and mileage.
Your vehicle will be used to satisfy your debt in the event you stop making payments. For this reason, the lender will never allow you to borrow more than your car is worth. In fact, most lenders will only allow you to borrow a certain percentage of your car’s value.
If you are still making payments on your vehicle, the lender must also consider your equity in the vehicle when determining how much you can borrow.
Equity is the difference between the resale value of your vehicle and the amount you still owe on your vehicle. This is important because it will help the lender determine how much money they will be able to recoup if you stop making payments on your loan.
For example, if the resale value of your vehicle is $10,000 and you still owe $2,000 on a purchase loan, your equity in the vehicle is $8,000. In this example, the lender will only be able to recoup $8,000 if they are forced to take possession of your vehicle to satisfy your debt. The lender will only allow you to borrow a certain percentage of this amount.
What Are the Benefits of Collateral Loans?
There are a number of benefits to obtaining a car collateral loan rather than a traditional personal loan. Some of these benefits include:
- You may still qualify for a car collateral loan even if you have credit.
- You may not have to wait days or weeks to get cash. Many car collateral lenders offer same-day approval to borrowers who submit their paperwork promptly.
- You can hold onto your collateral while you repay your loan. You won’t need to hand your keys over to the lender in exchange for the cash.
- There may not be prepayment penalties on car collateral loans, so you won’t incur additional charges if you decide to pay off your loan ahead of schedule.
- The application process is often easy. It may take a few minutes to apply for a car title loan, and the entire process can be done online or on the phone.
How to Apply For An INeedCashNow Car Collateral Loan
Now you know the basics of car collateral loans, you should be able to determine whether or not obtaining this type of loan is right for you. If you are interested in applying for a car collateral loan, here’s what you could do:
- Call INeedCashNow at 1-855-713-6522 or fill out the form on our website.
- Talk to a loan specialist to find out if you qualify. The loan specialist will review the details of your loan, including the interest rate, term, and amount you are approved to borrow. Make sure you are comfortable with these terms before accepting the loan.
- Submit all of the required documentation. The loan specialist will explain what documents need to be submitted in order to finalize your loan. You can submit your documents via email, fax, or text message photos.
- Collect your cash. You can either pick up your cash in person or accept your cash via a check or wire transfer.1
Don’t wait any longer to get the cash you need apply for the cash you need—contact a loan specialist today to find out if you qualify for a car title loan.
1 This is not a guaranteed offer of credit. Loan approval is subject to meeting lender’s credit criteria, which include demonstration of your ability to repay the loan, providing collateral of acceptable value and equity, and the grant of a first priority lien on your motor vehicle. Due to the Military Lending Act, installment loans secured by the borrower’s motor vehicle are not offered to military members or its dependents.