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Whether you’re looking for a bigger loan amount or you have a poor credit remark, you might need collateral to get the advance. Collateral is any item of value that would be used as a security against the loan. In case you default on the loan, the lender has the right to repossess the asset, sell it, and use the money to settle the remaining balance and fees.
Purchasing a Car Through Personal Loans
For most people, applying for this secured loan means using their car title as collateral.
Using Your Vehicle As Collateral
When you have a car, you can use it to get a loan that’s slightly cheaper than a payday advance. This kind of loan can be acquired from lending companies that apply expensive interest rates. Therefore, before you get a car title loan, be sure to understand its benefits as well as the risks involved and shop around to find the best rates before sending a loan application. Look for lenders who offer the best possible rate and better terms.
Before Taking Out A Car Title Loan
Prior to signing up for a title loan, be sure to check your vehicle’s insurance policy. Some lenders may not accept those who have basic insurance as this only covers the wreck of the other person’s car.
If you have a more advanced insurance, the lender might ask you to add them as a beneficiary on your insurance policy. Should anything happen to your car, the lender will still get the value back by being entitled to the insurance payout.
Car Title Lender As The Lien Holder
Once you found the right loan provider for your car title loan, you’ll give the signed title to the lender, who, in return, will sign as the lien holder. This gives the loan provider the legal right over your car, so in case you default on the loan, they will practice their lien holder’s right.
It can be hard to shake off bad credit. It will, after all, likely to stay on your file for at least six or seven years. Still, even when you’re in a bad credit situation, you’ll find that there are still lenders who will be willing to open their doors for you.
To increase your chances of getting approved for a bad credit personal loan, start by checking your credit score. Get a copy of your credit report too to check if there are no errors on it. Make sure to avoid sending in several loan applications to. Lenders will consider this a red flag that you might be trying to take out more money than you can ever afford to pay. In addition, go for facilities that offer searching so as not to cause any further damage to your credit rating.
Personal loan options for bad credit borrowers
There are several options for you if you want to take advantage of a personal loan despite your less than impressive credit score.
Specialist bad credit loans are offered by lenders who are willing to cater specifically to cater to the needs of borrowers without the perfect credit histories. Loans of this type are going to cost a lot of money and eligibility is going to be based on your ability to pay the loan back instead of just solely on your credit score.
Secured personal loans are another option. If you have bad credit, it is easier to get a loan when you will provide security such as a property, car, or other valuable asset. This way, lenders will be happy to overlook some negative marks on your credit file.
Guarantor personal loans are available for you too. You can find somebody close to you who happens to have a good credit score who can guarantee the loan. This is a bit risky to them though as this technically means they agree to be legally bound to the loan- that is they’ll have to pay it off in the event that you can’t.