You need money to take care of some type of short-term emergency. Owing to the current status of your credit, that may not be the easiest task to manage. One factor that’s in your favor is that your luxury vehicle is paid in full and can be used as security. That means many car title loans companies will be willing to work with you. Here are some essentials that you should know about this financing approach.
What Sets a Luxury Vehicle Apart From an Economy Vehicle?
What defines a luxury vehicle? It’s not so much the make and model as the quality that goes into the manufacturing of that vehicle. A true luxury vehicle provides more creature comforts than a standard or economy car or truck. It’s also more likely to include features that are hard to get on lesser vehicles. The market value of a luxury vehicle tends to remain higher than other cars or trucks. It’s the latter factor that’s especially important to potential lenders.
The Amount That the Lender Will Approve
Owing to the facts that your luxury vehicle is free of any type of debt and it’s unlikely to experience much depreciation during the life of the loan, car title lenders will consider it to be an excellent investment. Given the relatively low risk associated with recouping their money if you should default, you can expect to receive a higher loan amount than any of them would offer for an economy vehicle. That’s important if you have a pressing obligation and need more cash to settle it entirely.
Options for the Installment Payment Schedule
With an installment loan of this type, you may have several options on how frequently you remit payments. Many lenders will provide the option to make monthly payments, just as you would do with a typical installment loan. You may also have the option to make weekly or bi-weekly payments instead.
The payment frequency is something you want to look at closely. If more frequent payments are affordable and would allow you to retire the debt sooner, this type of schedule may work. When more frequent payments will not reduce the interest that you pay or otherwise benefit you in some manner, opting for a monthly payment schedule makes sense.
Retaining the Use of Your Vehicle
People who have never secured car title loans wonder if they can still drive their vehicles. The answer is yes. Technically, it’s the title that you temporarily turn over to the lender. Should you default on the loan, the lender will collect the vehicle and retain that title. Assuming you make the payments on time, the vehicle remains in your possession for the duration of the loan. Once you settle the debt in full, the lender releases the title back to you.
The Benefits of Settling the Loan on Time
Since you already have the money from the loan, what are the benefits of paying off the debt on time? The most obvious advantage is that you don’t have to worry about the lender seizing control of the vehicle. Along with being embarrassing, the accumulation of fees and charges that you would have to pay in order to get the vehicle back will be significant.
When the lender does report to the major credit bureaus, those timely payments help you improve your current credit scores. Make sure the lender does report activity to one or more of those bureaus. Over the life of the loan, your score could improve to the point that locking in better rates and terms will be possible next time.
As with any type of financing, pay close attention to the commitment you assume by accepting a loan offer. Make sure you can repay the debt on time and understand how much you will pay over the life of the loan. If you’re happy with the terms and can honor them without fail, make the commitment and get the money that you need.