All about Car Title Loans in Canada
A car title loan works much in the same way as a regular installment loan. The difference is that the loan itself is secured against your vehicle. The lender registers a lien against the vehicle to secure the loan in case of default.
The meaning of a car title loan tells that it is possible for you to borrow a good amount of cash for a period of time, against your car title. Here, the loan that you get is known as a car title loan. In order to get this loan, all that you need to do is to get a lien against the title of your car to the selected lender. In that way, if you are looking for immediate cash now, the only solution to your problem is to opt for Car Title Loans offered by a reliable lender, like BHM Financial Group. This action will enable you to solve your crippling debts.
Car title or auto loans give you access to credit, which can typically be calculated on a percentage of the wholesale value of your car. Typically, because the car title loan is secured, a borrower can obtain a lending rate relatively lower than that of an unsecured personal loan.
What if I Have Bad Credit?
If you have a low credit score then a car title loan is probably the easiest way to obtain a loan. Your weak financial profile is offset by the fact that the loan is secured, and as such, this type of loan will help them to build their credit.
Individual consumers suffering from either bad credit or no credit can definitely look into this as an option. By the company offering this loan, In fact, no credit check needs to carry out. If you are borrowing money, then the vehicle that you own is used as collateral. The funds that you get are considered as secured. The amount that you are looking for through a car title loan is determined by the lender after assessing the value of your vehicle.
Important factors that matter in securing a car title loan:
1. Loan amount
The amount you can borrow will likely depend on how much your car is appraising. For the maximum loan amount set by the lender. With the value determined after an appraisal, generally, you can borrow 25-40% of the value of your vehicle.
2. Loan term
Loan terms will differ between providers but can last anywhere from weeks to a couple of years.
3. Payment flexibility
Find out if a lender lets you make payments that match your pay cheque schedule from your job. This might be bi-weekly or monthly. This means you can immediately pay off your loan and budget your income and expenses more easily.
Benefits and drawbacks to consideration of Car Title Loans in Canada
Pros
1. Receive your funds quickly
With online applications, lenders can transfer funds into your bank account by the next business day.
2. Bad credit is OK
Since you’re providing collateral in the form of your vehicle’s title, you don’t have to have a good credit score. Lenders will be willing to lend to you because of the secure nature of the auto title loan.
3. Better rates
Auto title loans tend to offer lower interest rates when compared to other unconventional forms of credit like payday loans and installment loans.
Cons
1. Possibility of losing your car
If you aren’t able to pay back your initial loan plus the interest it accrues, the lender has the right to take possession of your vehicle. So make sure you know what you are getting into before you sign the loan contract.
2. High cost
While these loans typically come with lower interest rates than payday loans, comparing to standard loans, they are still costly. Consider whether you can afford the repayments before taking out a loan.
Things to avoid while getting a car title loan
1. Taking on a loan you can’t afford
If you think you may have trouble paying off a loan in a timely manner, you may want to avoid taking it. If you don’t keep up your payments, you could generate more fees, damage your credit and possibly lose your vehicle, putting you in a worse situation than you were in before.
2. Refinancing
If you can’t pay off your loan in the original term set out in your contract, the lender may allow you to refinance or rollover your loan. on top of your existing fees, you have to pay additional fees and interest.
3. Skimming over the loan offer document
Make sure you go through the terms and conditions of your loan carefully. This should give you a clear indication of how much the loan will end up costing you. If you don’t agree to the terms, you’re under no obligation to accept the loan.
General Eligibility criteria for car title loans:
- Be a Canadian citizen or permanent resident
- Be at least 18 years old, or the age of majority in your province or territory
- Have proof of a steady income
- Own your car outright, however some lenders may approve you for a loan if your car is almost paid off
Steps to apply:
- Go online or in person to a lender
- Provide your name, date of birth, address and email address
- Produce a valid form of ID
- Give details about your employment status and income
- Have your vehicle appraised
Apply for Car title loan at BHM Financial here.