Have you ever heard the term “auto pawns” and wondered what the process is all about? The concept is quite simple when broken down. Basically, if you own a car outright, you can borrow against its equity for a short-term loan.
For example, in the case that your car is worth $10,000, you can in theory borrow up to $10,000. You would then agree on terms and conditions that require a monthly payment and include an interest rate. If you fail to make your payments on time or fail to pay you will most likely be subject to fees, a higher interest rates, and chance losing your vehicle.
How Does an Auto Pawn Differ from a Bank/Traditional Loan?
- No credit checks are required and no reporting to credit bureaus – When you apply for a bank loan, your credit is run and granted loans show up on your credit report. Auto pawn, jewelry loans, and gold pawn loans don’t require credit checks. This is extremely helpful for those who have undergone a recent bankruptcy, home foreclosure or have a low credit rating.
- The car is used as collateral – Traditional loans are based on faith that you will pay the loan back. On the other hand, when you participate in a pawn loan, the item pawned is used as collateral. If for some reason you default on the loan, you will lose the object you choose to pawn.
- Auto pawn loans are usually granted instantly – Once you are approved for the loan, you can usually expect cash on the spot. They are great for emergencies. Some traditional loans can take quite some time to get approved.
If you are in a tough spot financially, you may want to consider an auto pawn. For approval, you must share proof that you own your car outright, have auto insurance and be able to make monthly payments. The sooner you pay off the loan the better, as interest quickly accumulates. Make sure you think carefully about your decision and find a pawn shop Huntington Beach that you trust.
We wish you luck as you find a deal that works best for your future!
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