What Happens If I Use My Car As Collateral For A Loan
Customers often ask us how car title loans work and what they need to do to use their vehicle as collateral for a loan. It turns out that you don’t need much other than proof that you own a vehicle with significant collateral. Most people can qualify for these types of loans using the collateral from a car that’s worth $5,000 or more. There likely won’t be a traditional credit check and you can keep driving your vehicle while the payments are made monthly.
Car Collateral Loans – How Do They Work
A common type of collateral loan is a car title loan, meaning you put up your vehicle’s equity to use as security for a loan. These loans are great for someone who owns a fully paid off car, and you don’t need to deal with a lengthy credit check to qualify!
After you complete the Premier Title Loans online application, we’ll contact you to review the lending offer and set up a quick vehicle inspection. Assuming everything checks out, you’ll then sign the contract and be able to pick up your funds that very same day!
The lender will hold your car’s pink slip as collateral for the loan. That’s different than how a title pawn works as this type of loan has no requirement to use your vehicle as collateral. Instead, you’ll sign over the title to the lender and they’ll be added as a lienholder. Repay the loan as quickly as possible to get your pink slip back and avoid the increasing interest charges.
Documents Required For A Loan Using A Car As Collateral
Now that you know how a car collateral loan works with Premier Title loans, you’re probably wondering what docs are required to get approved. Here’s what you need:
Your Car’s Title: A lien free vehicle pink slip is the main requirement for any car collateral loan. This document is held by the lender and is the security that backs up your loan. You can’t have any other claimants or lenders on your pink slip.
Vehicle Details: Any lender offering collateral loans will want to see and inspect your vehicle in person. They’ll look for damage or other issues that could affect its resale value and they also want to confirm the car or truck runs ok and has no mechanical issues.
Income Verification: Premier Title Loans works with local lenders and most of these companies will need proof that you make at least $1,000 a month.
Is An Online Title Loan On A Financed Car The Same As a Collateral Loan?
Yes, these collateral loans are similar to car title loans as they both use your vehicle’s equity as security for the full funding amount. This is a secured loan and your equity enables a lender to offer far more cash than what’s common with an unsecured loan. Collateral loans using your vehicle can lead to loan offers of $5,000 or more, where a typical unsecured loan checks in at around $800. The bottom line, a lender is far more confident offering a higher amount when there’s equity backing up the loan amount.
The application process is also similar to these types of loans; you can apply with Premier Title Loans online or over the phone. From that point, you will be approved based on the vehicle’s worth and then make payments to pay down the amount borrowed. After settling the financing terms, you can get your car title back.
What Happens If I Use My Vehicle As Collateral For A Loan – Wrapping Up
Anyone considering a vehicle collateral loan should first understand what happens if they were to default on the loan. In this scenario, your car may be repossessed and subsequently sold at auction. Stay in contact with your lender if you’re ever close to defaulting or missing a monthly payment. Of course, on the flip side of that, a collateral loan is not dependent on your credit score and applicants can borrow $5,000 or more with just their vehicle’s equity. So it’s important to evaluate the risks and benefits of a car collateral loan and determine if it’s right for you.
Contact Premier Title Loans for further questions about accessing your car’s collateral and getting immediate cash with a standard vehicle equity loan or a classic car title loan! We work with borrowers nationwide and will get your equity loan approved fast, so apply now!
Jessica has been working in the title loan lending industry since 2012. Before that, she managed a team of customer service representatives for one of the largest payday loan companies in the US. Since coming to Premier Title Loans, she’s overseen our sales and marketing department and looks forward to educating consumers on their different financing options. Jessica is always open to feedback and questions related to short term loans!