28 Jul Car Title Loans: Is this is a good option for cash?
Cashflow problems, job loss or merely end of the month blues. You may be needing cash quickly but don’t have access to credit cards or perhaps you have been blacklisted. So where does this leave you and what can you do in order to secure cash fast? Car title loans are one way of securing cash fast, let’s look at how these work.
How do Car Title Loans work?
Car Title Loans work in a similar way to pawning your jewellery or other high value items. Read more about this here (How to Pawn your Car) Basically the pawn broker will evaluate your car and lend you money based on what they think your car is worth. The pawn broker then holds onto your car title until the money with interest has been repaid. Usually the money plus interest needs to be paid in 30 days but this (plus the interest) can rollover into the next month. If you are not able to repay this amount, the pawn broker will then keep your car title and sell the car for cash.
Who qualifies for Car Title Loans?
Basically if you own a car and have the car title deeds, you will be able to pawn your car for cash with a pawnbroker. In South Africa you will need a form of identification in order to pawn your car. Pawn brokers don’t usually conduct credit checks nor do they deny your loan if you are sequestrated as they will use your car as collateral. The loan will be taken against the equity that you have built up paying your car off. So the portion that you still owe the bank for your car will be deducted from the value of the cash loan that the pawn broker will give you.
What to look out for
Once you have decided to pawn your car for cash it’s important to read the fine print at the pawnbroker you choose to do business with. Aspects to look out for include:
- Read what the interest rate will be. Some pawnbrokers charge an interest rate as low as 0.7% per day whilst others charge 3% per day interest.
- What are the penalties for late payment or non-payment? Could one late payment cause your car to be taken away? Make sure you understand this before you commit.
- Does the loans interest rate increase if you are late paying?
- Does the pawn broker you’re speaking to have a good reputation or will they disappear with your car? It’s important to only pawn your car for cash through reputable pawn brokers.
What alternatives are there to car title loans?
Before deciding on a car title loan, it’s important to evaluate all your options for securing a cash loan as well as do all the necessary research before committing to one single option. You will need to compare the interest rates as well as penalties for late payments. (Read more about Good Ways to Secure Cash Loans here)
1. Loans from your Employer – depending on who you work for you should be able to get an emergency loan. They may have a program available that provides emergency loans to staff members in need. Although this is an option, many companies don’t offer it.
2. Payment extensions – If you’re thinking of borrowing money in order to pay for monthly expenses such as rent and utility bills. Perhaps try and ask for a payment extension for these. Depending on the interest rate they will charge or penalties you may incur, this could be an alternative option to a car title loan.
3. Credit Cards – More often than not banks and other financial institutions will charge a lower interest rate than a pawn broker. If you have access to credit through a bank, it’s a good idea to explore this option first before committing to a car title loan.
4. Pawning other valuables – Pawning valuables such as jewellery, furniture or Kruger Rands may be a better option to a car title loan. As your car provides you with access to your job (which is where you earn money), it probably makes more practical sense to pawn the valuables that you don’t use on a daily basis.
Car Title loans are definitely a way to access cash, quickly. However before you rush off and pawn your car, make sure you do your research first. Asking friends and family for a loan as well as applying for personal loans from the bank are also options you should explore first.
Should you wish to secure a car title loan, contact Good Fellows Pawn Brokers.
Good Fellows Pawn Brokers are one of South Africa’s leading cash loan companies. With a ridiculously low 0.7% interest rate per day and the option to pawn your car and drive their car free, Good Fellows Pawn Brokers offers instant cash loans on all assets such as cars, bikes, jewellery, business assets and more. Speak to a friendly consultant at Good Fellows Pawn Brokers today to pawn your car for cash.