When you need money in an emergency, you can go to any lengths to get it and that is why pawning your belongings or taking a car loan is two of the easiest ways to get it. And if you have a bad credit score, probably these are the only two methods you can use to get any quick loan to tide over the emergency. Before discussing whether it makes sense to pawn assets or take a car title loan, you need to understand the pros and the cons of both of these.
Understanding car title loans
The car title loan requires no credit check and no documentation apart from signing over the car title to the lender. In many cases, you can get the money within 30 minutes to within an hour as only the condition of the car and its current market value is considered.
The resale market value of the car is calculated and then the lender evaluates the price of the car and based on that your loan amount will be approved. The lender will hold your car title with the agreement that if you default on the loan, the lender has all rights to sell the car and get the money back. Your car is being kept as collateral for a short time, the interest rates that are applicable are very high. So if you cannot pay the loan amount along with the interest within a set period, you can say goodbye to your car. But if you have the means to repay the loan quickly, car title loan is one of the quickest ways to get money on credit regardless of your work profile and credit history.
How do pawning assets work?
When you have old gaming consoles, odd jewelry pieces or anything of value that can be sold, the pawn shop is the best place to liquidate them for the hidden value. All you need to do is walk into a pawn shop and the employee would assess the items and give you the value of it. Based on that a loan amount would be offered and you will be required to pay the loan and the interest or forefeet the items. But when you pawn your items, you run the risk of probably never seeing them again unless you needed the loan for a short time and have the necessary finances to get them back after paying the principal and interest.
You run the risk of losing your assets at the pawn shop and the risk of losing the car to a title loan. You need to evaluate the benefits and banes