Introduction To Auto Equity And Vehicle Title Loans
There are many different kinds of personal loans. Two of the most common ones are an auto equity loan and an auto title loan. Both allow you to borrow money using your car, RV, motorcycle, or other type of vehicle as collateral.
Which loan is best for you?Getting an auto equity loan is the better option if you are still making payments on your vehicle. Although it may have a higher annual percentage rate or APR, the process tends to be less complicated and lets you get access to cash quicker.
Getting an auto title loan is the better option if you own your vehicle. The reason is that this car title loan usually allows for a higher borrowing amount compared to the other type of loan.
Because interest rates differ depending on which state you are in, it is best to check with the proper organizations and agencies to get accurate information. You will have to do some research on this so that you can protect yourself against vehicle title loans or car collateral loans with very high APRs. Also, be aware that your credit score does not have any influence on whether or not you can secure either loan. Important decisions, such as whether you receive an approval or rejection and the amount loaned to you, are made by assessing and calculating the value of your car, RV, motorcycle, or whichever vehicle you are using for the loan.
Why should you get an auto equity loan?
When applying for a loan, you usually need to offer something as collateral. In the case of an auto equity loan, that collateral is your vehicle. If you are having a difficult time deciding whether or not this is the right type of loan for you, here is some more information to bear in mind:
Even if you have not fully paid off your car, this is one of those car collateral loans that lets you borrow money based on how many payments you have already made on your car. You still get to keep and drive your car while paying off the loan. The APR for this type of loan is generally higher compared to vehicle title loans. These days, any APR under 5% is considered good and anything below 4% is even better.
Keep in mind that if you miss a payment, the consequences can be quite major. A borrower who fails to pay can face repossession of their vehicle. Therefore, be sure you can make the required payments before entering into this type of loan.
Why should you get an auto title loan?
To be approved for a car title loan, you have to satisfy a number of conditions. Also, before signing and finalizing the deal, there are a few things you should be clear on. First, be sure to find a reliable, trustworthy, and reputable lender to protect yourself and your property. There are many unscrupulous ones that may try to sell you other types of loans or switch your loan without you knowing it.
Second, your state may not allow auto title loans so do the necessary research to make sure it’s a legal loan. Today, there are 16 US states where auto title lenders run almost unregulated, and three-digit APRs are allowed. In some states, APRs are capped and structured. Finally, failure to make payments on your loan can lead to repossession of your car. In the 16 states where auto title loans are legal, lenders can take 100% of the sale of any repossessed car.