A bigger challenge faced by working men and women today is to find the money for emergency requirements. At times, one unanticipated adversity can cause extreme financial need, particularly for men and women having bad credit standing. Well, in such times of financial crisis, people have one asset resting in their garage or driveway – yes, it’s none other than their personal car and they can use it to avail the funds they require urgently, especially when they fail to avail funds from other conventional sources such as banks and other financial institutions. Auto pawn loans offer quick cash loans to people in need of an instant cash injection.
What Is an Auto or Car Pawn Loan?
Auto pawn loan is all about availing cash loan money in exchange for depositing your car with the pawnbroker as a guarantee referred to as collateral. And you’ll get the possession of your vehicle back once you repay the loan amount and interest before or at the expiry of your agreed loan term. In the unfortunate occurrence wherein you fail to pay back the loan amount, you’ll lose the ownership of your vehicle, as the pawnbroker will sell your collateral (i.e. car, jeep, van or any other vehicle you have pawned) in the open market to recover the loan amount, interest along with booking a small profit so that they can remain in the trade. However, if you’re having difficulty in repaying your loan, you can extend your loan by a month by paying the interest for that month in advance.
How to Qualify for an Auto Pawn Loan?
Yes, there is a criterion and you need to meet them to qualify for an auto pawn loan; however, it’s not that difficult, here is what you need:
You must own your vehicle: To qualify for an auto or car pawn loan, you must own the vehicle (i.e. car, jeep or any other vehicle) fully without any owing to the financial lending companies or banks.
Age & ID verification: You must have attained 18 years or above and should have valid photo identification. Identity is verified just to avert car thieves from pawning stolen vehicles that actually don’t belong to them.
Condition of vehicle matters: Your vehicle must be well-maintained and in good condition without any considerable body damage or major mechanical issues. Auto pawn lenders will require vehicle inspection to ensure that the vehicle runs properly and does not have any major cosmetic issues. Your vehicle’s condition may influence the loan amount, so before taking it to an auto pawn store, do yourself a favour by cleaning it up.
Based on your vehicle’s condition and mileage, most of the auto pawn lender will pay a fraction of the retail value of your vehicle. This is beneficial to both – it keeps you from borrowing more money than you can actually repay in a short time-frame and protects lenders from getting overexposed to losses.
The Bottom Line
The decision to pawn a car isn’t an easy decision to make. When you hock your car to the auto pawn lender, it will deprive you of the use of your vehicle, so you’ll need to arrange for alternate transportation. Also, you need to plan to pay back the loan within the agreed timeline with the lender. Nonetheless, people who are going through awful financial situations, auto pawn loans can offer a significant lifeline of cash.