If you’re feeling a bit of a financial pinch at the moment, know that you are not alone. The unemployment rates are still high due to the market distress that COVID-19 put businesses under. This is a time where having assets is a plus, and you can use them to get some emergency funds for a short period. Enter car title pawns! Getting a car title pawn can be a great option for you. Yet, you must understand what they entail. Keep reading for the top six things you need to know about getting a car title pawn.
Car Title Pawn 101: Short-Term Emergency Funds
The very first step to getting a car title pawn is understanding the nuances of this type of financial instrument. Car title pawns were designed for people who need access to fast cash to manage debt or deal with an emergency. It’s not a long-term type of investment financial option. You may be able to use a car title pawn if you outright own your car, or you have a minimal amount left to pay for complete ownership. It’s also sometimes known as a fast auto pawn.
Short Pawn Duration
The average for a car title pawn is around 30 days, which is a rather short duration of time compared to other types of financing. The process works by pawning your vehicle’s title. In return, the lender will give you money, and then you must repay the title pawn in 30 days or pay the interest to extend the pawn another 30 days. As with any other type of financing, you’re expected to pay back the lender the money owed plus interest.
Ease of Access
One of the greatest perks of title pawns is that almost anyone can get one. Of course, try your best to pick a professional and trustworthy lender to avoid taking too much risk and maybe even running into a fraudulent company. Even with bad credit, you can still qualify for a title pawn. Most car title pawn companies do not pull credit reports, since they’ll be using your vehicle as collateral.
Car Ownership or Equity Is a Must
The key requirement of being eligible for a car title pawn is either owning your car free and clear or having equity in your vehicle even if you are still paying for the vehicle. After all, the pawn is based on using your car as collateral. At Lake Title our title pawns may allow you to get some much-needed money to cover expenses. You may be able to qualify for a 30-day interest-free title pawn so make sure you ask the title pawn lender representative if you can qualify.
Car Title Pawns Can Come with High-Interest Rates and Fees
Unfortunately, to make car title pawns more accessible to people, there is a higher percentage of risk if you fail to meet the 30-day repayment terms. These types of pawns have higher interest rates than traditional financings.
That’s why you need to understand the terms of your title pawn, including the APR, and the total cost of the title pawn before signing any papers. Looking at it just from an APR (annual percentage rate), it is expensive, but it’s meant to be a short-term (30-day) opportunity for you if you need funds and plan to pay it off quickly.
You Could Lose Your Car – But It’s Not Common
You have to be rather financially aware and careful when it comes to title pawns. If you can’t pay the money back on time, there are two options that the lender can take.
The first would be to extend your pawn by paying at the very least, the minimum interest due, which would allow you to extend for another 30 days. Problems start accumulating when you fall into this cycle of extending your title pawn for months, so it is never recommended. Lake Title offers this option if you are unable to repay in the 30-day terms, but they will always encourage you to be smart and pay back the original title pawn amount plus any interest and fees on time.
The second option would be to repossess your car, but the good news is that this rarely happens. But if it does, if you want to have your car back, you will have to pay the account out in full which would include the remaining Principal Balance, all interest, all additional fees potentially including repossession fees, and lien fees.
Understanding Car Title Pawns
If you’re unfamiliar with what a car title pawn can bring to your financial table, they might seem a bit intimidating at first glance. However, by keeping in mind the key six things you need to understand about car title pawns, you can begin your search armed with good information.
Let us at Lake Title help you with the process of getting the funds you need. You can reach us online or by phone at (352) 692-2274 for our West location. We have one convenient location (Lake Park, GA) where you can bring the vehicle and if qualified walk out with a check in hand for the amount borrowed.