3 Things To Know About Car Equity Loans Before You Take One

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When you need money fast and own a car outright, you could use the title of this car to get a loan. This is a simple way to borrow money, but it is also risky. Before you rush out and take a car equity loan, you should fully understand what you are getting into. You should take the proper steps to protect yourself and your car, and you can do this by understanding three things.

How Much You Will Get For The Car

A car equity loan is designed to give you money for the value of your car. In exchange, you will need to give the lender the title to your vehicle. This type of loan is considered a collateral loan, because it exchanges money for an asset.

When you complete this transaction, you can protect yourself by knowing the value of your car. You can find out the value of any vehicle by looking it up. When you do this, you will need to enter the specifications of the vehicle and its condition. This will tell you what the car is worth, which will help you get a fair loan amount through a car equity loan.

The amount a lender will give you for your car will typically be wholesale value. If the lender ends up seizing your car for lack of payment, they will need to be able to sell it quickly to recover the costs of the loan.

How The Terms Work

When the lender makes you an offer for your vehicle, it is your responsibility to fully understand the terms of the loan. Car equity loans are not the same thing as car loans; they are actually quite different. Here are three ways they are different:

1. They are not installment loans – You may be required to make payments on your car equity loan, but the payments might be due every week or two weeks, and there will be fewer payments than with a car loan. In some cases, the loans are due in the form of balloon payments. This means that you will not have to make payments over a period of time, but you will have to repay the total loan amount by a certain date.
2. The interest rates are higher – When you take a car equity loan, your interest rate will be much higher than it would be on a traditional type of car loan. As you look over the terms, read the interest rate section carefully. You might discover that the stated interest rate is per month instead of per year. Higher interest rates mean that you will pay more in all for the loan.
3. Short duration – Traditional car loans usually last for three years or longer, but car equity loans can be due in as little as 30 days.

These terms can be doable, as long as you fully understand how they work. If you decide to take the loan, you must come up with a plan to repay it on time. This is the best way to use a car equity loan, and it will help you prevent problems.

The Result If You Fail To Pay

The main problem you can have if you do not repay your loan on time is that the lender could take your car from you. Keep in mind, the lender will have the title to your car. The lender will also have a contract with your signature on it, and the contract will state that if you default, the lender can take your car from you.

You can easily avoid this by making the payments on time. By doing this, you will repay the loan when it is due, and you will not have to worry about losing your vehicle. To learn more about these loans, contact a lender that offers car equity loans or visit http://driveittitleloan.com. 

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14 July 2015