Uncertainties in life are inevitable. As a result, it is not surprising that many people find themselves with unplanned financial needs such as medical bills, emergency travel needs among others. Urgent financial needs may be overwhelming given the time it takes to secure a bank loan or any other financial institution offering credit loan. Fortunately, there is always a car pawn shop which can provide instant cash using your vehicle as collateral.
7 Facts about auto pawn deals
Most people who have never dealt these instant loan dealers may not understand how they work. Here are six facts you need to understand the operations of a pawn shop.
- Loans Provided
Auto pawn shops provide loans on your car. There are two types of loans offered by different dealers namely auto loan and title loan. The auto loan uses your car as collateral. The owner of the shop remains with your car, and you walk out with the money. Title loans, allows you to drive away with the car but the pawn dealer remains with your car’s title for the agreed period.
- Loan Repayment
Loan repayment includes the borrowed amount, interest and other fees. The loan is repaid within a minimum number of days or months. Defaulting payments give the dealer a legal owner of the car. Some pawn shops allow you to sign a new contract or pay additional fees in case of default.
- What Can You Pawn?
Different pawn shops specialize in different items. However, auto pawn dealers only deal in vehicle, motorcycles, and boats. When you go to pawn your car, you will be required to provide your car and a title on in your name. The importance of the last requirement is that if the car’s title is not in your name it does not belong to you. There is no way you can pawn what is not legally yours.
Most pawn shops are licensed by a state agency. If you are thinking of dealing with one, you should ensure the dealer’s license is updated.
- Storage Facility
Some pawn shop chooses to remain with your car until you settle the loan together with accrued interests and fees. Most of them have secure storage facilities where they keep your vehicle and others. Losing your car through burglary will be a great loss to them
- Only Functioning Vehicles
It is true that these shops accept old cars but only functional ones. This is because if you fail to repay, they will have to sell the vehicle to get their money back. In such a case, junks are bad for business.
- Background checks
Lastly, these shops usually conduct checks to certify that the car is not stolen or is not collateral for another loan.