Borrowing money isn't as easy as it once was, but it is even more difficult for people with bad credit. Mainstream financial institutions use a credit scoring process to determine the risk of the customer defaulting on an emergency cash loan. However, specialist bad credit lenders may still be able to help as they offer a loan with no credit checks. When an unsecured 24-hour payday loan isn't sufficient, an auto pawn shop loan could provide the answer. The money can be used for absolutely any purpose and no questions will be asked at any stage.
How to Qualify for an Auto Pawn Shop Loan
- The prospective customer must be at least 18-years old. Lenders have identified a correlation between age and higher default levels. There may be rules in some states that require the minimum age to be 21, but these will be specified.
- A full-time job is preferred, but this isn't essential. In order to get approval for a bad credit auto title loan, it is necessary to prove that the debt is affordable. For example, that person may be expecting a bonus, tax refund or an inheritance payment.
- Whilst many lenders require that any car loans are cleared before granting an emergency cash loan, this isn't necessarily the case. At least 75% of any car finance must be paid-off. The less money secured against the vehicle, the greater the likelihood of fast cash advance approval.
- A copy of the car title, two forms of identification and a pair of car keys must be provided to the lender. The vehicle remains in the possession of the borrower throughout the entire process.
How Bad Credit Auto Title Loans Work
When the decision has been made to pawn an auto, the value of the vehicle will need to be assessed by an expert. It will often be based on the blue book value of the vehicle, but could be determined by an in-house assessor. Bad credit lenders will normally lend a maximum of 50% of the vehicles value to ensure that there is sufficient collateral to cover any interest that will accrue. Percentages will vary between lenders.
The Cost of an Emergency Cash Loan with No Credit Checks
Despite putting up a vehicle as collateral, an auto pawn shop loan is still very expensive. For example, a $3,000 fast cash advance accrues up to $750 of interest in just 30 days. Some states have banned bad credit auto title loans and others have placed a limit on the maximum APR. For example, the maximum rate of interest in Iowa is 35% per annum. The borrowing term is typically between 30 and 45 days.
Advantages and Disadvantages of a Fast Cash Advance
Whilst opting to pawn a car is a great way of getting an emergency cash loan, it has a number of potential pitfalls. Fail to keep-up with the repayments and it will lead to the vehicle being repossessed and sold at auction. This is why a set of car keys are requested. Subject to the amount that is borrowed, it may be possible to renew the agreement. A Missouri auditor discovered that 3.5 bad credit auto title loans are renewed for every new loan that is taken out. Interest continues to accrue so more money will need to be repaid at the end of the term.
Sources
"Car title loans." Americans for fairness in lending.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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