Car Title Loans Vs. Payday Loans
Do you have cash problems you don’t know how to solve? If you do, then certainly you have thought about securing a car title loan. Caledon car title loans are similar to payday loans in some areas. The latter is a type of loan which is granted to anyone regardless of credit status. With a payday loan, the amount that can be borrowed ranges from $500 to $1000. Lenders of payday loans require their costumers to give them information about their current employment status, assets and liabilities. The disadvantage of payday loans is that it is rather risky because consumers are not required to submit anything as collateral to secure the loan.
On the other hand, car title loans are a bit different. Borrowers of Caledon car title loans are required to submit the title of their car, which is also known as the “pink slip” before the loan is approved. Similar data requirements as to payday loans are also asked from the customer. The value of loan approved will depend upon the amount and equity of vehicle that is given as collateral.
Common Car Title Loan Payment Terms and Conditions
Consumers of car title loans are expected to pay the loan in a certain time interval. Payment terms vary from three months to two years. The longer it takes for the borrower to pay off the loan, the higher the interest charges and fees will become. When this happens, it would be very difficult for the borrower to pay off the loan and eventually he or she will have to face the consequences of defaulting in a car title loan.
Effects Of Late Car Title Loan Payments
Because car title loans are both a risk to the lender and the borrower, most loan agencies have designed a strategy to still earn from defaulted Caledon car title loans. The following are common resorts of lenders with borrowers who jumped over their payment obligations:
Repossession. All loan agencies have this as a condition whenever a borrower constantly fail to pay off their loan giving the lenders the idea that the borrower is trying to escape his or her obligation.
Auction. Since repossession will not do anything to help the lenders cover the defaulted car title loan, lenders would sell the repossessed vehicle through an auction and use the proceeds to cover the loan.
Enforcement. Other than auctioning the repossessed vehicle, there are lenders who force or insist their customers to fully pay off the loan before giving back the vehicle.
Sue. This is but the last resort of lenders. Usually after auctioning a vehicle, the profit is not enough to cover the loan. What the lenders do is ask the borrower to pay the difference. But since the borrower already lost his or her vehicle, he or she finds it unfair to still pay off the difference. When enforcement won’t bring results, lenders resort to legal aid.