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25 Apr 2019   /   0 comments

Everything You Need To Know About Auto Pawn Loans

Paul
auto pawn loans

Everyone in the world today has certain things that they would like to achieve before a particular period in their lives. However, we can all agree that things that we least expect can hit us at the most unexpected times. This may leave us confused. Chief among them would be the need for emergency cash which we may not have but need desperately. You can get your emergency money resolved with auto pawn loans.

If this is the situation which you find yourself in, the good news is that there are so many options which you can access when it comes to getting extra cash. This options would also not disappear irrespective of the fact that you might have a bad credit history. One of the more popular options would be to get an auto pawn loan.

One reason that makes the auto pawn loan option quite tempting is the fact that all the processes which you would have to follow when you are going for a loan with the traditional lending institutions that are available. Another reason is that the cash would be made available as soon as possible.

Most auto pawn shops would make sure that you get your cash within two or three days. All these come together to ensure that the prospects of taking an auto pawn loan look too tantalizing to resist. However, before you make the bold step to take an auto pawn loan, it would be really important that you know what it is and what the whole process entails. Knowing this will help you assess if the risks are worth the worth.

Understanding Auto Pawn Loans

These can be referred to as a short term loan which is collected based on the title of your car. this combined with your ability to repay the loan in time would decide just how much you would get from an auto pawn loan. The auto pawn loan and the auto title loans are often mistaken for each other because of how similar they are. However, there is a clear distinction between both of them.

When it comes to auto title loans, you are allowed to take the loan based on your car which would serve as collateral or security. During this period, you would still be allowed to use your car to do anything that you want.

However, the auto title loan company would have a lien over it. To ensure that the car is left in good shape, they would often request that the car should have insurance coverage. This is, however, different when it comes to the auto pawn loan.auto pawn loans

With an auto pawn loan, you would have the opportunity to get a short term through the value of your car just like the auto title loan. However, once the loan has been granted and given to you, you would not be allowed to use your car. In other words, your car would be taken from you until you are able to pay back the loan which you owe.

When the loan is given to you, you would have to pay back the loan within the period which has been allotted to you. This period would usually be just a few weeks. However, it can very well extend to a few months depending on the agreement which has been put in place with the team.

When dealing with auto pawn loans, you should expect that the interest rates which you would be charged would be much higher. It could even sky-rocket more if you are making the loan agreement with a credit card or through the use of another personal loan.

While the interest rates can be considered to be quite high, there are much more manageable when compared with the loans which would be gotten through payday. Another difference here would have to be the presence of security. With your payday loan, you would not have any collateral to fall back to in the case that you default.

However, with the auto pawn loan, your car is considered to be collateral and would be repossessed if you should fail to repay the loan which you have taken.

How to Obtain An Auto Pawn?

Now that we have a good idea of what it would mean if you want to take an auto pawn loan, how can you get this loan if you have made up your mind? The first thing you would have to bear in mind is the fact that you are about to pawn your car in exchange for some loan. Therefore, the necessary transactions which would need to take place can definitely not be done online. You would need to make plans to visit shops which give auto pawn loans.

Once you are at a shop, then you can have the salesperson check out your car in order to ascertain its value. Don’t worry. You would not have to stand around for so long as it would only take a few minutes. Once this has been done, the salesperson would take into account the value of the car and make you an offer for your loan.

Once you have agreed to the loan, you would need to provide proof for a few things. Chief among them would be your source of income. This is to show the pawn shop that you intend to pay back, and you have legal means of repaying back the loan. The next thing which you would have to do is to make sure that you have your proof of address or residence with you.

Normally, any legal document which has your address would be considered sufficient. Many people use bank statements and utility as proof of their residence.

It is important to keep in mind that the major reason why you are being asked to present all this is to reassure the pawn shop dealers that you are not going to run away with their money. It would also help to assure them that in the event that you are unable to pay back the money which you owe, they would find it easy to communicate with you.

What Requirements Do You Need To Apply For A Auto Pawn?

Now that we have a good idea of what and where you must go before you would be able to find an auto pawn loan dealer, the next step would be to find out the things you would need before you can be given a loan by any dealer. Here are some of the main things which you would need to have;

  • Car

Of course, it is an auto pawn loan. Therefore, the absence of a car would not just cut it. Now, this simply does not mean that you can field any car and it would be accepted. First of all, the car has to be your own. In other words, the title of the car needs to be in your own name. There must be no lien subsisting or attached to the car at the time when you are asking for the loan. You would also need to make sure that your car has its value high. Very old cars stand a higher chance at being rejected by the auto pawn dealers.

  • Identity

Before any lender would agree to give you a loan, they would need to have a good idea of who you are. This is also true when it comes to getting auto pawn loans. You would need to provide some proof showing that you are really who you claim to be.

To put the minds of your lenders at rest, you would need to give them an identity card which has been issued by the government. This identity card could very well be a driver’s license, international passport or any other identity cards that were given. You should make sure that you submit when you make your application.

  • Income

As was earlier stated, you would need to prove that you have a steady source of income. This is necessary as most lenders would want to be sure that they are giving out their loans to persons who are trustworthy and have a way of paying back. Not having any proof of income would prove to be detrimental to your quest.auto pawn loans los angeles

  • Residence

Also, you would need to show them proof to verify where you are currently living. It would be no use to tell them where you are living without any proof as your application would most likely be rejected.

Proof of residence that is most likely accepted is a bank statement which is not older than three months or a utility bill which is not older than three months. This would be considered to be acceptable

While the requirements are pretty straight forward, it is important that you have a good idea of what you would want before you start your search for an auto pawn loan. Here is something which you should keep in mind this would help make the best decisions when it comes to getting an auto pawn loan;

  • Interest rates

You should remember when going for an auto pawn loan that you would probably have to deal with interest rates that are simply very high. Most times, the interest rates which you can expect to get would be over the 100% mark. However, as earlier mentioned, the only good thing is that it is way better than anything which would be offered to you if you want to take a loan from your payday.

  • Your Car

As earlier stated, the main difference between auto pawn loans and auto title loans is the fact that you would not get to keep your car once the application for the loan has been accepted. Most auto pawn shops would insist that the car remains with them during the duration of the loan. Therefore, if this car is the only one you got and you would need it for your daily activities, then the auto pawn loan is not the loan for you.

Repossession

Another thing which you would have to keep in mind is what happens if you are unable to pay back the loan. You might have a very good plan of paying back which would probably succeed. However, you would need to consider this before making a decision.

Also, it is important to note that when the car is sold after a default, the extra money which your car is worth would not be given back to you. It would be taken by the auto pawn shop. For example, if you have a car which is $10,000 and you collect a loan which is worth about $5000, the extra $5,000 which your car would bring upon its sale would not be given back to you, it would be kept by the auto pawn shop.auto pawn

So that is the best and worst of the auto pawn loans. If you wish to reconsider, there are several other options which you can consider taking. Here are some of them;

  • Credit unions: you can choose to borrow some money from credit unions. This would prove to be very useful especially if you are part of one.
  • Auto title loans: auto title loans or title pawn loans would allow you to keep on using your car during the loan period. if this was your deal breaker with an auto pawn loan, then this would most likely come as good news to you
  • You can also consider borrowing some money from your family members or your friends. This would ensure that you are under less pressure when it comes to paying back your loan.

Another thing which you should make your eye on would be your credit score and history. In the world of lending, that is your key to getting a much lower interest rate.

So that is everything you need to know about auto pawn loans. If you have an interest in getting one of those, following the above tips would surely lead to getting the best deal possible. You would be able to get your cash as quickly as you would want.

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