Difference between Car Equity and Car Title Loan
Well,
there is plethora of lending options available in the market, car equity and
car title loans are two different types of car loans. Both types of loans can offer you money for
emergency purposes but if looked closely, they do have a subtle difference
between them. Moreover, if you are also looking for a car loan, it may be
perplexing to decide what one should opt between the two. So here are some
basic differences mentioned between the two, which will help you choose the
best alternative for you.
In car
title loans, generally, you borrow a sum of money by giving your car title as collateral
to the creditor. But here, you must hold the original copy of the title of the
car, i.e. you should be the owner of the car. While with auto equity loans they
are for borrowers who are lien
holder and are making payments or instalments on them. If you have agreeable
equity in the vehicle, you can apply for the loan.
The
sum of money you
are allowed to borrow is typically somewhere within the 50% of your current
loan’s equity. However,
a person with bad or no credit history can apply for both the types of loans that
suit his situation. Also, in car equity
loan as well as car title loans, you
can get a loan in a day or two, which makes it apt for emergency purposes like
economy crisis, paying medical bills, credit card bills and education fees or
for other personal purposes.
The basic
requirements for car equity loans are that you are employed and crossed a
certain age. Also, you must have a
driver license and car insurance and should also show proof of how much more your
balance is for your vehicle and details about your payment history. For a car
title loan, employment and age is also a considerable factor. Moreover, the car title loans California asks you to
show documents of the title of the car; typically the car age should not be
more than fifteen years to qualify for the loan.
Condition
of your car is also a crucial factor as it is decides how much money you can be
offered by the creditor. With car equity loans, you will be allowed to drive your
vehicle though even at the same time as you are paying the amount you have
loaned. While, the sum of money you can get as loan is higher in case of car title
loan.
Both the type
of car loans can prove to very beneficial, especially if you want quick cash
for a short period of time. One may read the contract carefully, for examples,
what actions the creditor can take in case of late payments, how interest rate
will vary, etc.
However, when
vehicle is at stake, one must act prudently as you can lose your vehicle, so
that you have to pay much more than, the loan may have actually cost. It is crucial that your monthly payments are
on time. Above all, the most important thing is that the repayment process is
smooth for you and the lender also.
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