Know The Consequences Of Inability To Repay You Auto Title Loan
- By: alona Rudnitsky
It is true that today, with the flourishing number of private lending companies, the acquisition of an auto title loan is very easy and very fast. Because of this leniency in the grant of loan, many car owners are lulled to apply and get a loan through their cars. If you are one car owner, do not just jump into it. It is not only enough that you know how to obtain the loan. Most importantly you must examine the repaying mode.
Just like any loan, the auto title loan which you might want to obtain has a number of conditions. These should be properly evaluated before jumping into the process. The first question you must be able to answer in the affirmative is - Can I service the repayment scheme? The YES to this question is very vital because if in your heart there is a little doubt in your availability to repay, then, you must think of another method of sourcing fresh funds.
Remember that with an auto title loan, you will be mortgaging your car and this is covered by legal documents. Any delay in the repayment can cause additional expenses on your part. You will have to pay additional interest, penalty and other charges which could have been included in the mortgage contract. A worst scenario could be when the lending institution will take possession of your car.
When you are granted an auto loan, the amount of loan to be granted is far below the actual market price of your car. Some lenders will only give a loan equal to 30% of the actual value. You are lucky if you find a lender who can raise the loan amount to 50% of the car's current worth. When your car is repossessed by the lender, it would mean big profit for them. Prior to default, you could already have made payments to the lender. This goes to the lender's income coffer once your car is taken.
Setting an example, let us assume you have a car worth $20,000. You will only be granted a loan ranging from $6,000 to $10,000. Upon lender's repossession of the car due to your amortization defaults, the lender will take away $20,000 worth of your asset for the $6,000 amount it has lent you. In essence, you lose $14,000. This is if you had not yet made any payment prior to the default. If you already had, then that adds up to the already big lost.
When your loan was granted, you are to submit a spare key of your car. This spare key will enable the lender to haul your vehicle anywhere, anytime in the event that you fail in your payment schedule. The mortgage contract is binding and would give your financial lender the right to get the car.
Auto title loans are guaranteed good source of emergency funds. The lenders are blessings during your time of need. However, you have to determine if you have financial means to repay the loan. Think and consider!
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