Here's the deal. When it comes to loans with traditional banks and financial institutions, you're only as good as your credit report. Unlike these lenders, you won't be penalized for past mistakes such as foreclosures, automobile repossessions or a bankruptcy with vehicle collateral loans.
What happens if you have a poor credit history and a financial emergency such as repairs or high utility bills? If you possess a car title without liens, you may qualify for collateral loans with bad credit.
Collateral loans on vehicles are similar to other types of loans. Once you've been approved for the loan, you can spend the money on any expense including medical bills, vacation expenses and school tuition.
Collateral Loans Explained
Collateral is property that's used to guarantee a loan. Here's an example of a collateral loan. When you purchase a home using a mortgage, your home will be used as collateral for the loan. If you default on a home mortgage, the lender can take the property to recoup the loss from the loan.
Collateral loans for cars are similar to home loans. In this instance, you'll use your vehicle as collateral to guarantee that you'll repay the loan according to the terms of your agreement.
When you use your car as collateral in exchange for a cash loan, it reduces the lender's risk. Lenders are more likely to offer this type of loan option if you have bad credit.
An automobile title loan is another type of collateral loan. When you sign an agreement for this type of loan, your lender will require you to hand over a copy of your automobile's title.
How Do Collateral Loans Work?
One thing that you should know about collateral loans is the approval process is quick. In fact, many customers can get approved for a loan within 24 hours.
This is excellent news if you need a quick cash loan without delays and hassles. You don't have to wait a few weeks to get your loan decision.
The collateral loan process requires a minimal amount of paperwork. Here's how it works. Complete a loan application for collateral loans. You can access an application online.
Since the application only requires you to provide a minimal amount of information such as your name, email, vehicle information and phone number, you'll be able to complete the application quickly. After you complete the application, you will submit it online.
After you've been approved for a collateral loan and sign the loan contract, you'll get your money and begin the repayment process. Your loan installments must be paid on the predetermined due dates.
Throughout the loan repayment process, you are free to make additional payments without penalties. If you want to repay the loan early, you have that option.
A benefit of a collateral loans near me is you can drive your car while you repay the loan. Getting a collateral loan won't interfere with your transportation.
After you repay the loan, your lender will return your vehicle's title. Your loan agreement with your lender will be terminated at this time.
Will a Lien Be Registered to My Car?
An important thing for you to remember is you will continue to own your vehicle. Signing an agreement for a collateral loan won't take away your ownership rights.
Since your car will be used as collateral to secure the loan, your lender will register a temporary lien on your vehicle with the motor vehicles department in your state.
Although you will remain as the registered owner, your lender will be registered as a temporary lien holder of the car. After you've repaid the loan in full, the lien will be released and the lender's company name will be removed from the title.
Benefits of Collateral Loans
Customers apply for collateral loans because of the quick approval process. Here are a few other benefits of collateral loans.
1. Bad credit isn't likely to stand in the way of the money that you deserve. With collateral loans, most lenders are concerned with the value of your automobile and its condition - not your credit history.
2. Apply for a loan online. When you apply for a loan from a bank or financial institution, you may be required to go to the lender and complete the application in person. This can be embarrassing for you if the lender denies your loan application. With collateral loans online, you can complete the application from the privacy of your home or office.
3. Borrow up to the value of your vehicle. Your car determines the amount of money that you can borrow. If you have a car that's valued at $1,000, your application may be approved for that amount of money.
As you can see, there are so many benefits that make applying for a collateral loan a smart thing to do. If you need access to quick cash without the stress of a lengthy application process, collateral loans may be suitable for your situation.
Vehicle Collateral Loan Requirements
There are certain requirements that all applicants must meet in order to be approved for vehicle collateral loans. Here are the vehicle collateral loan requirements.
1. Proof of income - Vehicle collateral loans must be repaid on time. For that reason, you must verify that you have a source of income that you receive regularly. Approved sources of income include (but not limited to) employment, commission, independent contractor, Social Security, retirement and disability.
2. Government issued identification - You must provide a driver's license or an identification card. Your ID must be valid. Expired identification cards won't be accepted.
3. Clear car title - A clear (or lien-free) car title is one that doesn't have any lien holders listed on it. If you owe money on your vehicle for the original loan or another title loan, you must repay the loan before you will be approved for a collateral loan.
4. Vehicle ownership - You must be the registered owner of your vehicle. If you are a co-owner of the vehicle, the other owner(s) must sign the collateral loan contract.
Are Collateral Loans Legal?
Each year, millions of people are approved for collateral loans throughout the United States. Vehicle collateral loans are available in approximately half of the states in the U.S.
Even if vehicle collateral loans aren't offered in your state, it's likely that you'll be able to secure a collateral loan online or in another state. Many people travel to a neighboring states to get approved for quick and easy collateral loans.
Apply for a Vehicle Collateral Loan Today
When you have bad credit, there may only be a few loan options that are available to you. Vehicle collateral loans are a smart choice if you have the income to repay the loan.
If you're interested in finding out how much money that you can get by using your vehicle as collateral for a loan, complete an application today.