Auto Pawn Loans: Pawning With A Difference
Irregular income, uncontrollable expenses, a credit card used up to the maximum, and a family to support-this is not an uncommon scenario. Where do go for emergency funds now? Are you thinking of pawning an item? Why not your car? Your car could be a pawn item with a difference if you consider auto pawn loans. You can continue using it while you procure a loan against it to solve your financial problems. Your car title document, and not your car, is considered the pawn item or security.Auto pawn loans are issued against your automobile as security. It is the fastest way to get cash in an emergency and you do not have to produce too many proof documents to get the loan application approved. Moreover, a bad credit score is by no means an obstacle in procuring auto pawn loans. Auto pawn loans, however, differ from conventional pawn arrangements in the following ways.• Usually, pawnbrokers take possession of the security item till the loan amount gets repaid but you don’t have to give up your car in order to avail an auto pawn loan. You can continue using it while you repay the debt in the form of pink slips. For this very reason, it becomes a lot harder for lenders to reclaim your vehicle and therefore, they discourage you from defaulting by issuing roll-over schemes, etc. • Some lenders may ask you to hand over a duplicate set of keys. Although rules differ from state to state, in extreme cases, some lenders also insist on installing a GPS system in your vehicle so that they can track it down if they have to reclaim it.• Auto pawn loan lenders generally lend only up to 50 percent of the car’s value. Since the car title used as security is worth at least twice as much as the issued loan, borrowers will make an effort to repay on time, which works in the favor of lenders.• In case of a default, the lender may send an agent to your residence or work place to recollect the vehicle. If the automobile is sold for more than the debt amount, honest lenders return the profit earned through resale. On the contrary, if your vehicle sells for less than the remaining debt, you may have to cover the loss.Some auto pawn loan lenders resort to deceptive practices by blurring agreement clauses to earn profits. Therefore, to avoid a debt trap, be extremely careful while reading the agreement for hidden clauses, etc., before signing it.