The car endeavor was a very resorted solution to obtain capital during the years of the crisis. It allows us to get money in our car as collateral. Here we tell you all its features and how this type of car loan https://texastitleloan.net/ can help you.
The commitment of vehicles as a source of financing
Pawn the car is to leave a vehicle of our property in a pawn shop in exchange for an agreed amount of money. If we resort to this method of financing, we will have to return the borrowed money within the agreed term together with the agreed commissions to recover the ownership of the car. If after that time we have not amortized the capital and interest on the loan, the pawnshop will keep the car as a way to repay the loan. That is, it is a guarantee for the lender to grant us the money.
After the outbreak of the economic crisis, the commitment of cars has become an alternative way to banking products, especially for those users who do not have a lot of income or a suitable work situation but do have a vehicle in their own right.
How much money do they offer for car pawn?
The amount of money we can get if we pawn the car will depend, of course, on the value of our vehicle. The pawnshops usually put a maximum limit that usually does not exceed 50,000 euros, although there may be exceptions. In any case, the amount of the loan they give us will always depend on the appraised value of the vehicle, which the lender will determine when analyzing its characteristics (model, state of conservation of the body and tires, mileage, etc.).
In general, car pawn shops provide between 30% and 80% of the appraised value of the car. Therefore, if our car is in good condition and is high-end, we can get a larger amount of money. The appraisal to determine the current price of the vehicle is done by the pawn shop itself based on the information provided in the application form, so it will not take more than 24 hours to know how much we can ask for and, in the case of that we decide to resort to the effort, in having the money. Valuations are made following the official bulletin of the sale of used vehicles published by the National Association of Dealers in Motor Vehicles, Repair and Spare Parts (Ganvam).
Types of car pawns
There are times when our car is our work tool or it is very necessary that we continue to dispose of it. This is why, as we see in the image, we can find two types of car pawns in the market:
Therefore, depending on whether we want to continue using the car or not, we will resort to one type of endeavor or another. The characteristics of both are:
The commitment to custody is the most common. The car remains as collateral in the deposit of the company, so we can not use it again until we have disbursed the money they gave us. Many entities say that they offer more money if you leave the car in their deposits, although later they can include some cost for this custody, so it can be counterproductive.
In the effort without custody is not necessary to leave immobilized the car and we can continue using it. Some companies will charge us a rent for being able to continue using our car, so we must value this option and the possible costs that we receive.
Depending on our situation and the conditions of the company we should choose one or the other type of endeavor. We must always bear in mind the risk of losing the car in either of the two modalities if we fall into default.
Costs of asking for money in exchange for your vehicle
Pawn our vehicle is a way to get money, but if we want to recover the ownership of our car, we will have to return the borrowed amount and, generally, pay interest. The interest rate applied to the credit depends on each company (between 6% and 15% APR), this price is somewhat higher than the current cost of financing a car.
In addition to the interest accrued, if we pawn our car, many lenders will also charge us the management costs for assessing our vehicle and processing all the paperwork. Another commission that pawnshops usually charge is compensation for early repayment, although we will only have to pay it if we return the borrowed money ahead of time.
Can I still use my pawned car?
Yes, but only if the company offers this option. Some of the pawn shops that grant loans in exchange for leaving the vehicle as collateral allow us to continue behind the wheel during the term of repayment of the credit itself. In addition, they will always offer us the possibility of giving up the car to get a higher amount of money.
This service can be very useful if we need our car to go to work or to carry out our professional activities and we do not want to give it to obtain the credit. However, by continuing to use the vehicle we will receive a loan of the lesser amount and we will charge a monthly rental fee. That is why before opting for this option we must calculate which option is more important, especially when the reimbursement period is long.
Conditions to get money for your vehicle
To be able to pawn our vehicle, it is necessary to comply with a series of conditions imposed by the entity in accordance with its risk policy. Each pawnshop establishes its own conditions, but the most common are those shown below:
Permanent residence in the regions where the company operates: having a guarantee and not being a personal loan, the borrower will have to have access to the vehicle in order to carry out the appraisal.
Antiquity: generally, the vehicle cannot be older than 8 years (10 years if it is a high-end model). Therefore better the less time has passed since the purchase of the car.
Free of charge: the car must be fully paid and we must be the owners of it.
Documentation in order: ITV, paid circulation tax, without domain reservation, etc.
The guarantee of these financial products is only the pledged vehicle, so it is not necessary to present proof of income. In other words, we can pawn the car, even if we do not receive a salary or any other income or have the backing of a guarantor.
However, we must bear in mind that it is not advisable to pawn the car if we do not have an income in conditions, because if we are not able to pay the fees, the company will keep our vehicle.
Make sure you repay the loans for your car
When pawning a vehicle to get a loan, the car is provided as a guarantee of payment, so in case of not repaying the loan, the pawnshop can keep the car.
Therefore, before pawning our car it is important that we make sure that we can return the money lent us in the agreed way, otherwise, the lender will keep the ownership of the vehicle and can sell it.
It is also interesting to know if the pawn shop we go to allows us to extend the repayment period if we can not pay on time because this service (despite having an associated cost) always comes out more than losing the car.