Using your car as collateral if you need money at short notice is a possibility many don’t realise they have.
There are a large number of online companies that will allow you to borrow money against your vehicle, whether it’s a car, truck or even a jet-ski!
If you decide to use one of these online services, the first thing you should do is read the terms and conditions at length, and take the time to compare to make sure you pick the company that is right for you.
The majority of these companies will abstain from performing a credit check on you, as you are willing to put the car up as a security, and this can help people on bad credit and those who don’t want to have their credit file report a check at this time.
Secured loans on cars are typically short-term loans with an above average level of interest. Remember, that if you do take out one of these loans and fail to make a payment, the company has full authority repossess your vehicle and sell it to reclaim some of their losses.
You will need to have a clear title in order to obtain a loan – that means that there must be no outstanding credit already tied to the car, which includes any sort of lease or personal financing that was used to get the car in the first instance.
Along with this, you will have to give a full account of personal information for you, and details for the car – including insurance details. The form provided by the company will cover everything you need to let them know before you start.
They are also likely to want to know the purpose for the loan – there are rules and regulations regarding borrowing and these will need to be followed to ensure guarantees and securities for both you and the lender. Expect a call or online communication from one of the company agents to work through any finer details.
The loan maximum will be determined by the current market rate value of your car – obviously you cannot secure a loan for something worth more than the item used for collateral. Most car-secured loans, therefore range from £500 to £4000.
Make sure you take care before agreeing to the loan, by checking interest rates and other small print details. While the initial buzz regarding getting the loan can fuel enthusiasm enough to just say ‘yes’, especially if you have bad credit and have been turned away previously, be cautious and make sure you don’t end up signing for a loan with an interest rate of hundreds of percent.
Some very short-term loans expect a full payment back with the interest at the end of a month, while others will give you spread out terms across a year or more.
Remember if you fail to pay back within the terms of the agreement, the lender has the right to take your car from you!
It is also worth checking that you keep the vehicle during the period of the loan. Though it is rare, some companies will take the car from you at the beginning and then only let you have it back once the loan is paid off. Again, do your research to make sure this isn’t the case.
Online secured loan companies know that the majority of their business comes from people struggling a little.
They are clever with their marketing and will draw you in if you have bad credit, or are elderly. Keep your eyes open and make the loan work for you, not the other way around. Do not take out any sort of loan if you cannot afford the repayments and interest involved.