It is true: getting an auto loan can be an effective way to generate some cash in a hurry when you are out of other borrowing options. In other words, if you are desperate for money!
This type of loan uses your car or a truck as a collateral: all you have to do to qualify is to drive yourself (along with the title in your name) to the lender. The lender will then appraise your vehicle to determine a loan amount, and you could be driving off with the cash you need in a matter of minutes.
You keep the car – they keep the title to the car until the loan is paid in full. You don’t need to have good credit (or any credit!) to qualify; you just need to own a car in order to turn your car title into cash – literally!
What could be easier, right?
Yes, it is actually very easy to get an auto loan… but be very careful not to turn that loan into the end of the road for you financially!
If you are considering an auto loan, you are certainly not alone: the size of the auto loan market may be even larger than that of the payday loan market. Times are tough and money is tight!
However, that doesn’t mean that you should forget about the possible risks, and – if you are considering getting an auto loan – that risks can be essential! Before applying for an auto loan, you should make sure that you can indeed repay your loan on time.
If you fail to repay your auto loan on time, you could lose your car. In this situation, the lender is entitled to sell your vehicle and keep all the profit. And – once you lose your car – that could lead to losing your job if you use that car to get to your job.
In addition to paying high interest, there is also a number of fees that can add up quickly.
Always ask the lender what is their APR (annual percentage rate). Why? Well, it is likely that you will be given a quote of the monthly percentage rate: however, be aware that a monthly rate of 25% translates into 300% annually! Be very clear on how much exactly are you supposed to pay!
If you get seduced by the prospect of quick cash, you will not be in for a pleasant ride!