In a car title loan, your vehicle is the collateral that secures the loan. As with all secured loans, car title loans come with the risk of repossession, if you default on the loan repayment. However, this does not mean you do not go for car title loans.
If you take the appropriate steps, utahmoneycenter.com says that you can avoid repossession. This way, you can still borrow cash and not lose your car.
Risk of Repossession
In a car title loan, you pledge the title of your vehicle to your lender, who will lend you the money you need. Statistics prove, however, that the actual risk of repossession is low in the car title loan sector. It is as low as 4% to 8% only. The car title loan is the least risky when compared to the other type of collateralized loans, especially home equity loans.
Steps to Avoid Repossession
- It's not desirable to get into a situation where you must keep looking over the shoulder for the repossession man. Find a reliable and reputed lender who is interested in giving you a reasonably priced car title loan and not in repossessing your vehicle.
- It's advisable to only take a loan that you need. This will make the instalments smaller and easily payable. Make sure to repay the loan on time, as this will keep the interest down and affordable.
- If you have the cash for it, you can start the repayment ahead of schedule. This way, you can repay it faster and avoid the risk of repossession. Make sure that the lender allows repayments ahead of schedule.
- If you're unable to make your monthly payments on time, it's a good idea to renew your loan. This will mean extra interest payment, but it is preferable to the risk of repossession of your only means of transport.
It's your personal decision to take a car title loan and remember that with a little care, repossession can be avoided.