It is nearly impossible to guarantee a hundred percent financial security at all times. Even the richest of businesses face unpredictable losses and go through tough times. These are the circumstances when you could need some fast cast without involving too many complications, and that’s when you can resort to a title loan.
Startups especially can consider this as a, perhaps desperate, way to help with a short term funding problem. However, before you dive into the procedure, you must understand the process and the terms surrounding title loans.
What is a title loan
Several loans involve surrendering of property to the lender as a guarantee for the amount that is being borrowed, and title loan is one in this category. Commonly referred to as Auto Title Loans, the required procedures under this include surrendering hard copies of the car documents to the lender.
However, by any chance, if the borrower fails to stand by the terms mentioned in the contract, the lender is free to sell the vehicle to obtain the amount owed.
When can you qualify for title loans
There isn’t much bias against what kind of vehicle is suitable for a title loan long as it is a functional one. The automobile can range from SUVs to two-wheelers to trucks where the valuation of the vehicle is the most notable factor.
The amount that you’re eligible for solely depends on the functionality of your car and the appraisal value, which is calculated by the lending party. In simple mathematics, you’ll be able to borrow a larger amount if the price of your car is more and if it is in a suitable resalable condition. However, that also means that you will have to be prepared to pay back a more substantial sum along with added interests.
Why should you consider this option
Unlike most other loans, car title loans do not need the borrower to have a solid line of credit. Anybody with a vehicle that is worth more than the amount being applied for is eligible for this loan. Moreover, you will still have access to your car, and only the titles would be submitted to the lending company as collateral.
The interest rates for collateral loans are much lower in comparison to other investments, and therefore, you can have a less hectic payment process. And most of the companies are enrolled for secure payback options, both online and offline. This ensures that the borrower can opt for the most convenient option to pay back in monthly installments, which can be scheduled with the bank upfront.
Cautions if you’re applying for one
There are some downsides to every option, and applying for a title loan isn’t an exception. Although the procedures associated are not too complicated and you can quickly get your hands on some liquid cash to get your going, you must be confident about the choice.
Once you’ve taken a title loan out, there’s no going back, and you will require to positively payback within the given timeframe. In any case, otherwise, the lender party is free to seize all rights to your vehicle and even sell it to extract the outstanding amount of the loan. It’s a very risky source of startup capital.