When you are considering a car title or vehicle registration loan, you need to understand all the terminology and how such loans work so you can decide whether this sort of financial help is the right fit for you. To make sure you aren’t lost if you decide to take out a car title or vehicle registration loan, we will define our most common terms and give you an overview of how the loan process works.
Car Title or Vehicle Registration Loan Terms
First, a car title loan or vehicle registration loan with Spot Me Loans does not require a credit report to be pulled. A credit pull, in the financial world, is all about how trustworthy you are when it comes to debts. Every time you sign up for something big financially—renting an apartment, buying a vehicle, getting a credit card—you give out your social security number, and that financial trail follows you in the form of a number (your credit score) attached to your social security number. If you are good at paying your bills on time, You have a variety of form of credit you use, you get a higher credit score. Above 650 is good. If you don’t repay a loan, get evicted, have court judgments against you or are consistently late on your bills, your credit score goes down.
Not all lenders rely on that credit score, and car title loans and registration loans with Spot Me Loans are in that category. We use your vehicle as collateral. Instead of solely trusting you to repay the loan, a loan made with collateral says that if you don’t repay the loan, we can repossess whatever your collateral is: in this case, your car, truck, motorcycle, RV. Whatever you used as collateral for your loan agreement.
Another very important part of the loan is whether you will be making interest only payments or if the loan is amortized. An amortized loan is one where you make payments that pay the interest and the loan at the same time. This means you are getting out of debt with every payment. If you are making interest only payments then you will still owe the initial amount you borrowed at the end of the contract in what is usually called a balloon payment. Those can be tough to make so be sure to always ask for amortized repayment plans.
All loans that aren’t from family, and maybe some that are, have an interest rate. An interest rate is the amount of money you pay for having lent you money. The interest is what pays us for helping you. The money we lend you doesn’t go in our pockets when you repay the loan; it goes to the next person who needs a loan.
If you go to get a loan from anywhere and they don’t explain the terms, take the time to ask. This is your money, your credit, and you need to know what you are agreeing to when you take out a loan. Afterall you will be signing a contract for the money and that needs to be fully understood before you sign!