When looking for quick cash, you might come across an interesting deal – getting a loan while using your pickup or semi as collateral. This way you can count on bigger sum because the cars tend to be very valuable, but is it worth it if a big short-term loan is typically very hard to pay back with huge APRs over 300% and a possibility to lose your vehicle in a case of a default! Let’s dig into the topic so you can then decide for yourself.
What are truck title loans?
This type of title loan works just like the other ones, the only difference being that your truck is used as collateral, therefore you can drive it while still paying off the debt. The amount you can get from such a loan varies from $100 to a $50,000 loan. Why is the range so wide? Because it comes down to the resale value of your truck. Another difference from a usual car loan is the length of the payment period – it can be as long as three years sometimes.
Keep in mind, that any car title loan company can provide you with a loan with your pickup as collateral, but they wouldn’t necessarily accept commercial trucks for the same purpose. If you need a loan and you’ve got a semi, you might have to search for a specific lender who specializes in such loans. Don’t worry – there is plenty of them, and some even offer loans that can be secured with another piece of heavy equipment.
What to Know Before Taking Out a Loan
Never rush into lending money, if haven’t tried to better your financial situation some other way. Borrowing is always a stressful affair, which can sometimes lead you to the cycle of debt, resulting in you taking out more and more loans, accumulating more debt and losing possessions.
If you’re in a desperate need of cash, make sure to look into:
- Organizations that help with food, shelter, and necessities. Those can be government-funded programs, non-profit agencies, or local charities and churches.
- Extensions on your payments from providers.
- Taking on additional projects at work, a side gig or asking your superior for an early check.
With the above methods, you’ll be able to better your situations without ending up in a vicious cycle of payments and debts. If you have bad credit score, check out Bad Credit Loans in Arkansas for the best terms.
Getting a Truck Title Loan
If you’re still positive that you need a truck title loan, you can apply however is most comfortable to you – either online, over the phone or in a store. But in any case, you will have to bring your truck for inspection, and provide your title and other documents before the lender will give you the money. Don’t worry though, usually, representatives guide their clients through the process, instructing them what documentation is needed and any other nuances, so the whole procedure doesn’t take more than half an hour between you getting to the establishment and leaving with cash.
Checking for Eligibility
Here’s where it gets even more different from the usual loans. For this type, you don’t have to have a good credit history! Sometimes even the proof of employment is not needed. Instead, what is required from you in order to be eligible:
- You have to be over 18 years old in most states. In Alabama – over 19, and in Mississippi – over 21.
- You have to be the owner of a vehicle.
- Your truck is not used as collateral in any other loan.
- You have to prove that you live in the same state that you’re applying for a loan. Sometimes a utility bill, a lease copy or some other documents will be needed.
- You have to have an income. Sure, it doesn’t have to be a job, but some kind of benefits, a pension, etc.
- You have to have insurance (typically, this is needed for larger loans).
Some lenders may have other rules and regulations, so make sure not to rely solely on this list, and check each provider’s requirements prior to taking out a loan. If you think your bad credit history will make you uneligible, visit Bad Credit Loans in Arizona to get help.
What Is Your Truck’s Value
An important question that many might have is how much exactly is their vehicle worth. To answer it, one has to take into consideration several factors: the model and make of the truck, the mileage, the general shape it’s in, etc.
Each lender conducts an inspection to determine how much they can lend you based on your vehicle. But if you want to know the rough estimate before contacting a potential provider, you can use, for example, Trucks.com tools or check your vehicle’s identification number. The online services sometimes are costly too, so keep that in mind – you might have to pay from $25 to $40 for those.
The Advantages and Disadvantages of Truck Title Loans
Understandably, before taking out a loan anybody would want to consider what benefits they can get and what price they’ll have to pay. So let’s dive into it.
- You don’t have to have a good credit history – any kind is acceptable.
- You can get a larger amount of money compared to a car title loan, because trucks are usually more valuable.
- You might have to wait only half an hour before getting funds when you apply in person. This depends on a lender though.
- Ther rates in this type of loans are high.
- The terms are usually pretty long, which leads to the interest adding up and with high rates, resulting in you paying off double, triple or more the amount you’ve borrowed.
- You risk losing your vehicle in case of default.
The last one is especially important for those using their truck for work. Watch out not to lose your source of income and wind up in more debt.
If you need to borrow a larger amount of money, you might want to opt for a truck title loan. However, you should go into this deal with a cool head and lots of information to avoid defaulting, losing your vehicle, or getting into the cycle of debt. Think twice before signing up for anything and calculate your budget carefully.