Auto Collateral Loans

By Author: Sarah Waters
Total Articles: 7
Comment this article

Bad credit score borrowers can get an auto collateral loan by using the title of their vehicle as the security. The loan can be paid back responsibly by having a good plan on how to pay in order to get out of the jam and improve your credit rating.

Bad credit rating can be a hassle in getting you some amount from banks. Sometimes we may need some cash in the case of some emergency such as accidents and hospitalization. This will be difficult for the borrowers to obtain the emergency cash because of their credit history. If you don't demonstrate a good pattern of repaying the debts on time, you will be offered a low credit score which will be unsecured credit.

Bad credit rating has some loan options of using the car or vehicle title to get the loan. They put up some collateral form which is a car title to secure the lender if the borrower may defaults in paying the loan. This form of secured debt is called auto title loans and most borrowers prefer the loans with secured debt because it carries an interest rate which is lower than unsecured.

Auto collateral loan have a very high competitive interest rate ...
... because of the security it offers to the borrowers and it will be higher than that of the conventional loan so that it will be higher than that of the conventional loan so that it can offset the risk of lending the borrowers with a bad credit. Failing to make the payments as to the repayment schedule, the lender is entitled to take the auto title in order to recover the debt. Qualifications to get an auto title loan requires one to own a car that will be used as a collateral and the car should be paid off or it must be nearly paid off.

Most lenders can lend the auto collateral loans up to a certain percentage rate which is based on the wholesale value of the car. They do this to ensure that they protect themselves if the car may lose the value over their agreement term which is 25 percent to 50 percent of the wholesale value of the car. The agreement terms may go up to 100 percent in some cases, but most of the lenders don't offer this 100 percent to those borrowers who default on the title loans. Sometimes some of these lenders incur some costs when they repossess and it may be difficult to sell the car at its full price but all these scenarios are clearly factored in the loan agreement.

It is necessary to ensure that you choose those lenders who are capable of offering a competitive interest rates and a flexible repayment options before you apply for the loan. These loans are easy and quick for approval and you can get the cash at any time you need and this is why many borrowers are attracted to the title loan. You improve your credit score by ensuring that you plan, make your payments diligently and keep the schedule to avoid the additional charges and even higher rate of interest.

Author of the article is associated with Trading Financial Credit LLC, the reputed name in providing car title loans. Inland empire, California, New Mexico, Arizona are some of the areas served by the firm.