Basically, a loan against equity is a type of short-term loan that comes with a higher interest rate. This requires that you offer your vehicle as collateral. Therefore, if you do not have an impressive credit rating but still want to take out a loan, we suggest that you consider taking out an Equity Loan. In this article, we will introduce you to this concept. Read on to find out more.
What is a loan against property?
First of all, this type of loan allows you to mortgage your car as collateral. If you do not repay the loan on time, the lender may take your car from you. These loans are usually short term and require you to pay a higher amount of interest.
So, if your credit rating is poor, you still have a great chance of qualifying for the loan. Most lenders won’t even consider your credit rating and history.
How it works?
First of all, you need to find a lender that offers equity loans. As long as you have a vehicle registered in your name, you may be eligible for this service. Before submitting your application, the lender may need to see your car, license, and proof of ownership.
Once your application is approved, you will receive the loan money by delivery of your vehicle’s address. Although the terms of the loan will be determined by the lender, most title loans feature a 30-day term.
In other words, once the loan period ends, you’ll make one full payment. You will pay the principal amount plus all fees and interest. Most lenders charge a fee of 25% per month of the loan amount.
This is why title loans are not suitable for everyone. If you fail to repay your loan on time, know that you will lose access to your car. So, if you want to get this type of loan, just make sure that you will be able to make the payments on time. After all, you don’t want to risk losing access to your favorite car.
The maximum loan amount
As far as your loan limit is concerned, it will be between 25% and 55% of the price of your car. The lender will take a close look at your car to get an estimate of its value. The loan amount may be $10,000 or more. In most cases, it’s less than $10.00, but some people borrow more to make ends meet.
According to reports from the Consumer Financial Protection Bureau, 1 in 5 home loan borrowers fail to repay their loans and lose access to their cars. Usually, they take out more loans to cover their previous loans.
In short, this was the introduction to title loans. If you want to get this type of loan, we suggest that you consider the information in this article. This will help you make an informed decision.