It is easy to form opinions on something we don’t know. Like most things in life, car or auto pawns have been subjected to this, as well. Many people believe that pawning a vehicle is a dangerous affair, involving illegal activities and slow processing. However, that is not the case; in fact, Auto pawn loans are easily and quickly processed, and with accredited lenders, it is even a safe process.
In this article, we will bust 7 common myths people have about auto pawn in US.
Table of Contents
1. The process is difficult
Not many are aware of the existence of car title loans and, as such, believe that the process is lengthy and time-consuming. However, unlike traditional loans, the processing time is less. All you will need is your ID copy, proof of residence, original registration certificate, and you are all set for applying for a car title loan. It’s that simple!
2. The interest rates are too high
Yet another belief surrounding auto pawns is the seemingly skyrocketing interest rates. The informal nature of the processing could be the reason behind this misconception, but that’s all it is—a myth. Accredited lenders comply with the Federal Consumer Credit Protection Act, which specifies the interest rates to be applied. Therefore, you will get a fair rate. However, ensure you are approaching an accredited lender to avoid being scammed.
3. Good credit score is a prerequisite
When you go for traditional lenders, a good and healthy credit score is necessary. Credit scores are how banks estimate the likelihood of you repaying a loan. Therefore, if you have a score below their expectations, it gets tough for you to secure a loan. With car pawns or car title loans, you don’t have to worry about such things because the lender can easily get their money back by selling your car if you default on payments.
4. You get the money after a long wait
Unlike traditional loans, car title loans are processed quickly. In best-case scenarios, where you have all the necessary paperwork ready, your loan application is processed within an hour, and you can access the money on the same day itself. Now, isn’t that more convenient than applying for payday loans?
5. It is hard to repay the loans
Car title loans or pawn loans are often believed to be hard to repay because of the informal structure of the process. However, most lenders offer a window of 1 to 36 months to repay the loan, during which you can easily pay off your loan. Moreover, some lenders even offer loan agreement renewal, allowing you to buy some time.
6. Lenders are unfair to borrowers
With a one-sided representation of lenders in popular culture, people often think pawnshop lenders offer an unfair deal to borrowers. While there is a grain of truth in this, it is not the absolute truth, and it certainly doesn’t speak for all the lenders. Most lenders are accredited and comply with the Federal Consumer Credit Protection Act, offering a fair deal to borrowers.
7. Lenders wish to sell your vehicle
Unlike popular belief, lenders don’t want to sell your vehicle. It takes extra effort, and most of them see it only as a last resort when you don’t repay your loans.
Conclusion
Pawning your car may seem like a bad option with all the myths and misconceptions surrounding this process. However, pawning your car is seamless and doesn’t take much time. Furthermore, with most lenders abiding by the Federal Consumer Credit Protection Act, you can safely auto pawn your vehicle without worrying about unfair interest rates.
Also read: Derive The Benefits of Online Money Lenders for Small Business Loans
