Auto Pawn Loans
Auto pawn loans are becoming a big hit, akin to the payday loans. What are automobile pawn loans? Automobile pawn loans can be defined as a loan granted to the borrower by keeping his car as a collateral. These loans are similar to second mortgage loans, except in this case the collateral is your car and not house. By keeping your car or any other vehicle as security, you can earn cash advance in a short time. Moreover, you are allowed to use your car during this period. These loans are offered through local auto pawn shops as well as some Internet companies. Car pawn loans are a risky affair and unless you execute fair amount of caution you may lose your car for peanuts. So what are the points to consider while pawning your car? What are the pros and cons of car pawning? Let us find out.
Pros and Cons of Auto Pawn Loans
Oftentimes, we are confronted with unforeseen expenses, which throw our monthly budget out of the window. If we are already tight on cash, this unwarranted expense may put a dent in our financial situation. During such times, a little cash at hand always helps. If you have savings to cover such expenses then you have no reason to worry. However, many people, mostly students, rarely have extra cash at their disposal. Hence, facing such a situation becomes difficult for them. Besides, most of these people have less than perfect credit scores, which impedes their options of seeking loans from financial institutions. Of course, instant cash payday loans or cash advance loans without credit check are one option, but then the formidable interest rates, make people wary of applying for such loans.
Under such circumstances, a car pawn loan can provide a relief. The process for applying for such loans is simple and most people become eligible. Moreover, there are no credit checks, so you can heave a sigh of relief if you have really bad credit scores. The lenders will inspect the condition, make, model of your car and accordingly decide your loan amount. You are supposed to submit the title papers of your car with the lender until you pay off the loan completely. The cash is immediately handed to you and the whole procedure can be completed in less than a couple of days.
Although, pawning your car for fast cash seems an enticing option, there is always a risk of losing your car, should you fail to repay the loan. The car pawnbrokers are notorious for selling your car as soon as you fail to repay your loan within the stipulated time. Usually, the maximum time allowed for repayment of loan is 30 days and the loan amount rarely exceeds $2500. Hence, make sure you can manage to raise the cash for loan repayment in a month's time.
Points to Consider while Applying
For becoming eligible for these loans, you need to be a US citizen of above 18 years of age. Moreover, the car title should be in your name. You will be required to show proofs of your income and residence. Auto pawnbroker's usually do the valuation based upon the make and model of your car. However, the physical appearance will also count, since it is responsible for the first impression. A seemingly excellent car may elevate your chances of getting higher loan amount. While pawning your car, it is always better to trade with reputed brokers. Some online companies have a good reputation in auto pawning. Hence, prefer them over your local auto pawn shop. Beware of unscrupulous people who may take advantage of your situation. Always read the contract agreement carefully before signing it.
Remember, car pawn loans should be considered as a last resort only. Just because the loan is easily available, you should not opt for it at the first sign of a financial problem. Apply for these loans only when you are in dire need of money and you have run out of other options.
