Car Pawn Loans
Whenever you want money, you usually approach a bank, they check your credit score, and a whole lot of other things like whether you have a stable income or not. If you don't have a good credit score, the chances are that you are likely to be rejected for a loan. What do you do in such a situation? In such a case you can go for car pawn loans, wherein your car is used as a collateral to give you money. If you use your car as a collateral, the chances are that banks would be willing to loan out money, even if you have a bad credit score. But there are several things which you need to know about vehicle pawn loans, before you go for it, and the following paragraphs will give you details of that.
Automobile Pawn Loans
When you go for auto pawn loan, for cash in return, you need to give your car title in return. This serves as a guarantee to the lender that you will return the money taken within a specified period of time. Along with the title, you may need to keep the car as a collateral as well, when you go for car pawn loans. Once you repay the loaned amount, you get back your car along with the title.
The best part of such a loan is that, the lenders do not check your credit ratings while lending you money. That's due to the fact that, they have your car with them, and in case you fail to pay, the car's value would cover the loaned amount. Unlike other loans there would be no collection calls to worry about. So it's very important on your part, to think whether you will be able to repay the loan on time, and if you can't you are bound to lose your car. Even if you default on one payment, there are chances that you may lose your car, so assess whether you can make regular payments on time.
The amount you would get through car pawn loans, depends on the value of your car. Many a time it so happens that lenders don't accept some auto pawns. If the body of your car is damaged, the chances are that you may not be applicable for such a loan. Moreover, there shouldn't be any fault with the engine, and it should work fine, only then you'd be applicable for car pawn loans. So the amount you are applicable for varies greatly on the value and condition of your car. On the downside, these loans have a higher rate of interest, but if you don't have any other option left, such loans are worth a try. You can always extend the duration of payment, and reduce the amount you pay each month.
There are a number of ways through which you can make regular payments. Other than making payments through mail, phone or through check, you can let the lenders directly debit the amount from your bank account on a specified date. With this option you don't have to go and deposit a check at the payment center, nor will you have to mail your payments, which may take sometime to reach, so there would be no chance of late payments.
If you allow the lenders to debit the amount from your account, it sets up a consistent payment history, which in turn has a positive effect on your credit history. And once you have a good credit history, you don't need to apply for loans with higher rates of interest, be it car loans, personal loans or home loans.
So going for car pawn loans, is an excellent option if you want a loan urgently but can't get it due to your bad credit past. It also gives you a chance to improve credit ratings, which will stand you in good stead later. Before signing on the dotted line, go through the terms and conditions, so that you know the amount you pay each month and other costs which may be involved.
