Car Equity Loan Versus Car Title Loans: What Are Their Differences? – Fast Action Finance
In the world of car loans, there are two things you can run to. These are car equity loans and car title loans. Both types of loans can help you make both ends meet, meaning, they can offer you money for emergency purposes. Choosing between these two, however, can be very difficult unless you have known the difference of one from that of the other. In this case, we encourage you to read on and find out later the better option you have.
What is a car equity loan?
The first thing you need to understand about car or auto equity loan is the fact that it is a perfect fit for those who are in need of money but are still making payments on their cars at the moment. When applying for an equity loan, the bank or the financial institution or whichever credit unit for that matter is considered the rightful owner of the car.
What should you expect from an auto equity loan?
A car equity loan will allow you to borrow an amount of cash in case you need some fast cash at the moment. If you want to know what to expect from it, you have to consider a couple of things. First, you should be ready to raise your queries with the bank or credit unit. Ask them about the terms before you even sign the documents in line with the loan. Enquire how much money you are allowed to borrow but usually it would be somewhere within the 50% of your current loan’s equity.
Requirements for obtaining a car equity loan
There are certain requirements you should comply with when obtaining an equity loan for your car. First, you should be able to meet the age and employment rudiments. You should also possess a driver’s license and your car should have a corresponding auto insurance. You should also show proof of how much more your balance is for your vehicle. You must likewise provide a document showing your payment history.
Expect too that you will need to agree with the lender in terms of the fact that they will have to take out a certain amount of security interest for the car so it will be easier for them to repossess it later on in case you did not follow their terms and you have defaulted on your payments. You will be allowed to drive your vehicle though even whilst you are paying the amount you have loaned. If you have a bad credit standing, do not expect you will be approved to obtain a car equity loan.
What about a car title loan?
Basically, there are certain facets in obtaining a car title loan that makes it the same as that of the car equity loan. That would include the fact that your car has an existing insurance and that you are of the right age to obtain the loan. An employer certification will also be required from you. If you do not meet the age, employer and insurance requirements then there is no chance you will be granted the loan from your car title. Also, the lender has the right to repossess the vehicle in case you default on your payments.
What differences does a car title loan have with a car equity loan?
There are certain points of differences between a car title loan and that of a car equity loan. For one, a title loan, compared to an equity loan, requires that you should be the owner of the car that you will use for collateral in borrowing money from a service provider. In another, the title loan can be obtained even when you have a bad credit standing or if you do not have any credit at the moment. Credit scores, therefore, are not deciding factors in being granted a car title loan.
Other requirements for a car title loan
Apart from the requirements mentioned above, there are yet other things to consider when obtaining a car title loan from the service provider. First, your vehicle must not exceed 10 years in terms of age. Second, the vehicle should be in good, safe driving condition. Depending on the requirements of the lender, other factors will be considered in determining the value you can get from a car title loan. Be prepared to check on the terms of the loan since this will depend on the person or entity lending the money for you.
Choosing between car equity loan and car title loan may not be that easy. But if you are currently facing some credit rating issues yet you need some fast cash for emergency purposes, obtaining a car title loan would be more favourable. If you want to know more about this type of loan and how you can obtain one, you can simply call us for help.