|
|
What is a title
pawn? A title pawn
is a way to get approved for a short-term loan, usually through some
form of pawn shop. The
short-term loan is based on the presentation of a title to a vehicle
(car, truck, motorcycle, etc) that is owned out-right by the
prospective borrower. The
broker evaluates the value of the vehicle in question and will usually
offer a short-term loan equal up to half of the wholesale value.
Short-term
loans for the title pawns vary in the amount of time for which they are
lent, dependent upon the needs of the borrower and the value of the
title. Once these
terms are discussed, the borrower will sign paperwork and leave the
title to their vehicle as collateral with the pawn broker.
What is
collateral? It is
something offered in return for a loan, in case the borrower does not
pay back the amount of the loan in the predetermined period of time. Be aware that, should you
default on your short-term loan payment, you run the risk of losing
your vehicle. The
pawn broker is entitle to keep the title to your vehicle should you not
pay back the borrowed amount.
Note that the
interest rate on title pawns is the same as any short-term loan and
will be excessive in comparison to a standard bank loan. However, often the
borrower cannot be approved for a typical personal loan or needs the
cash much more quickly than a bank could provide.
Therefore, the risk factor that the pawn shop
is looking at warrants the higher interest rate.
Short
term loans based on a title pawn can extend for longer repayment
periods than many pawn loans. However,
the longer the repayment terms, the higher the interest rate will be. It is always best to
balance the situation, making sure that the repayment period is long
enough for you to be able to meet the terms, while not paying
exorbitant interest fees.
New!
Online cash advances now available
|
