Car title loan can be referred to in different ways, some call it pink slip loan, auto title loan, and vehicle collateral loan among others. The major principle behind getting a loan with your classic car is that the lender gives you a loan amount based on the equity in your classic car. The lender will also put other factors into consideration, some of these factors include your income, the model of your car, and its mileage among others. The money you can borrow from the lender is based on the equity in your classic car. The equity in your classic car is how to get a classic car title loan.
How Classic Car Title Loans Work
Lenders give higher consideration to lenders who have new car, and also own a car free and clear title to the car because the equity in your car is what the lender uses as collateral. It must be noted that classic car title loans are secured loans.
Let’s consider an instance where you have a Mercedes Benz, C-Class 2018 model that is completely paid off without any lien on its title. The lender will evaluate what the fair market value of the car is, and then will the decide on what percentage of that amount you will be loaned, Hence, let’s say the fair market resale value is $22,000, the lender might then decide to loan you around $16,000 to $18,000. The reason for this is because, the lender on its part is also trying as much as possible to manage risk and this is why they will loan you only a certain percentage of the fair market value of your classic car. In case you default and fail to repay the loan, the lender will repossess your car and the car will be auction off. To manage the risk that may be involved better, the lender loans you only about 60% to 80% of the fair market value of your classic car so that they do not lose money on the deal.
Steps to Getting a Classic Car Title Loan
1. Apply online: You can apply on line for a car title loan or you can visit the nearest agent in your location to fill out the application form and submit. If you apply online, you can submit online as well without visiting your lender in person.
2. Submit Requirement Document: You will be required to submit all require document. If you apply online, you can scan and email all necessary documents to your lender.
3. Car Evaluation: Your classic car is evaluated to determine its current market worth as it is on this basis that the lender will decide how much loan you can get.
4. Get Approval: Once your documents are in order and your car is evaluated you will be approved and you will have an idea of what loan amount you will get.
5. Get Your Loan: The amount approved by your lender is credited into your bank account.
These are some of the likely steps that will be followed when you apply for a car title loan using your classic car as this varies from lenders to lenders.