Pawn Your Car And Still Drive Pawn shops have long been one of the fastest ways for people to get money when they need it by pawning a piece of property or taking out a loan against its value. The problem with this is that it means giving up the piece of property, at least […]
Pawn Your Car And Still Drive
Pawn shops have long been one of the fastest ways for people to get money when they need it by pawning a piece of property or taking out a loan against its value. The problem with this is that it means giving up the piece of property, at least temporarily. A car is often the most valuable item a person owns, but not having it would be a major inconvenience. The good news is that you can pawn your car and drive when you apply for a title loan.
A title loan takes that old pawn shop formula and updates it to be more convenient for consumers. If you’re interested in how you can pawn your car and drive, here are all the key details.
The Traditional Ways of Getting Money from a Pawn Shop
With your typical pawn shop, there are two ways that you can get money from a piece of property you own:
- Selling it.
- Using it as collateral.
With option one, you bring in any item you have that the pawn shop may want, someone at the pawn shop inspects it, and if they want it, they’ll make you an offer based on the value of the item. Of course, since the pawn shop is going to turn right around and sell that item, they can’t give you anything near its full value.
Option two starts the same way as option one. You bring your item in, there’s an appraisal and the pawn shop decides how much they can give you for it. The difference is that you’re only getting a loan for that amount. The pawn shop keeps the item, and when you come pay back your loan, you get the item back. If you fail to pay back the loan, the pawn shop is covered, because they can simply sell the item.
Drive Your Car with a Title Loan
Let’s say that you need a loan for a few hundred or even over $1,000 and the only item you have that will be valuable enough to serve as collateral is your car. But you have work, or school or errands to run, and being car-less would make that impossible.
Title loan companies aren’t the same as pawn shops, but they use the same general model, only updated to make it more convenient for you.
Here’s how it works – you bring your car in to the title loan company’s office, where they plug the following information into a vehicle value guide:
- Year
- Make
- Model
- Style
- Mileage
These factors, along with your car’s condition, are what determine its current market value. The title loan company will also check your car out to assess its condition and verify how much it’s worth.
Based on that information, the title loan company offers you a maximum loan amount that you can borrow. This will also depend on the title loan amount limits in your state. Some states don’t have any, and others have a hard limit in place.
Again, this will only be a portion of your car’s value, because the lender needs a buffer to be protected if you default on the loan.
Instead of giving the lender your car, though, you only need to give them your car title. You get to pawn your car and drive wherever you want.
The rest of your loan works exactly the same as a pawn shop loan. You must pay off the loan by the due date at the end of the term, and with most title loans, terms last 30 days. That can also depend on your state. You can typically extend your loan if necessary.
Once you’ve paid off the loan, your car title goes back to you.
What Happens If You Default?
Since the lender only has your car title, if you default on your loan, they will need to send someone to come repossess your car. How long this will take depends on the lender and your state, as certain states require lenders to give you time to catch up on your missing payment. After a repossess occurs, the next step for the lender is selling your car.
Lenders want to avoid repossession whenever possible for a couple reasons. It doesn’t result in a good customer experience, and it’s a hassle for everybody involved, including them. If you are short on cash when it’s time to pay for your title loan, it’s smart to communicate with your lender and see what title loan relief options are available, such as an extension for a lower payment this time around.
Like pawn shop loans, title loans are intended for short-term use. If that’s what you need, they can be extremely convenient. It takes little time to get one – in fact, you could get in and out of a title loan company’s office in under an hour. And it doesn’t matter if your credit is good or bad, because that doesn’t get checked.
