When faced with an emergency, there are several types of quick loans you can apply to get some quick cash. A good example of such a loan is a car title loan. A car title loan is a secured loan whereby you use your vehicle as collateral.
With a car title loan, you can borrow the full or partial value of your car. But most people make several regrettable mistakes when applying for a car title loan. Sometimes, the mistakes lead to losing the car or paying hefty interest rates and fines on the car title loan.
Therefore, if you intend to apply for a car title loan, here are three mistakes you should avoid.
1. Failing to Research Different Lenders
If you are desperate for quick cash, you might pick the first lender you come across. Failing to research the interest rates and fees charges on car title loans by different lenders can be an expensive mistake.
If you pick the first lender you come across there is a chance they charge higher interest rates and fees than other lenders. Different lenders charge varying interest rates and fees on car title loans. Hence, when you research different lenders, you put yourself in a position to pick a lender with favorable interest rates and fees.
Hence, before taking up a car title loan, research the rates and fees charged by different lenders.
2. Failing to Read the Paperwork
When you apply for a car title loan, you enter a written contract with the lender. A common mistake you can make is signing the contract without reading and understanding the terms and conditions.
Typically, the car title loan contract includes details such as:
- Amount borrowed
- Interest rates charged
- Due date for the repayment of the loan
- Late fee charges and when they apply
- What happens if you don't repay the loan on time
- When the lender can repossess your car
If you don't read the terms and conditions of the car title loan, you could end up losing your car. For instance, if the contract doesn't allow you to roll over your car title loan, the lender has the right to take your car as soon as you default payment.
3. Failing to Negotiate
Sometimes, lenders are willing to provide leniency when you fail to repay your car title loan on time. For instance, if the money you were expecting to repay the car title loan is delayed. Thus, forcing you to miss the repayment date.
If the contract you signed states that the lender takes your car upon failure to meet the repayment date, you lose your car. But, you can explain your reason for defaulting payment and negotiate with the lender to allow you more time to repay the car title loan. Hence, instead of losing the car, you can negotiate a reasonable late fee with the lender.
For more information on car title loans, contact a financing specialist near you.