Do you run a company? As a result of several hasty decisions you have lost financial liquidity and the future of your investments is under a big question mark? Today we will check whether taking a car-secured loan will be a good way to save the company’s budget. In the article, we will explain on what terms you can take out a pawn loan in a pawn shop, how loan companies operate and what is a misappropriation.
An inseparable part of managing your own business is making more or less risky financial decisions. Unfortunately, sometimes it happens that despite the best intentions and reliable preparation, the investments do not bring profit, and the implemented undertakings consume more capital than we thought.
When the company account is empty and another bank has refused a loan, it may be a good idea to take out a car-secured loan. Taking a loan will help you overcome temporary financial problems and help you “get back on your feet.”
Where can I get a car secured loan?
When we think about a loan, the bank usually comes to mind. However, a number of criteria must be met to get a bank loan. The key will be:
- high scoring and a positive credit history in the Credit Information Bureau,
- no entries in Economic Information Bureaus, colloquially called debtors’ registers,
- no arrears to the Tax Office,
- correspondingly long period of doing business.
As you can easily guess, many entrepreneurs will not be able to meet these restrictive criteria, especially if they have just started their business and have no history on their account. At this point, it’s worth asking yourself the alternatives to a traditional bank loan. Common answers we are considering is borrowing money from a loan company or taking out a car loan at a pawnshop. What is worth knowing before you choose the best solution for you?
What is a pawn loan car?
Lombard is an institution that grants loans against collateral. Loans are granted against vehicles, jewelry, electronic equipment, works of art or securities. It is worth explaining here what the concept of pledge means. The pledge is a limited property right, established to secure a specific claim, including future and conditional. Importantly, to establish it, it is necessary to hand over the item to the creditor.
By borrowing from a pawnshop, you will not be able to use your car. When the money is received, the car is “taken care of” by the lender. I must admit that this state of affairs can significantly hinder everyday functioning. Especially if the car is for commercial purposes. Before you sign a loan agreement, you should be aware that loans granted in pawnshops are among the most expensive forms of patching financial holes.
By returning the car to the pawnshop, you will be able to take out a loan of 40-50% of its value.
The value of the vehicle is assessed by the pawnshop, which in itself can become a field for abuse. Especially if a desperate customer who desperately needs extra money applies for a loan.
In most pawnshops you will have to return the money within a maximum of 30 days. Collecting funds for repayment within a month can be a challenge. As you can guess, many customers are unable to cope with it.
If you do not pay back the loan on time, you will have to say goodbye to your favorite vehicle. To recover the money you borrow, the pawnshop will cash your car. What’s more, there will be no question of paying back the difference between the value of the car and the loan amount. Pawnshop will take over your vehicle often for half its real market value.
There is no doubt that borrowing money on such terms should be a last resort. A proverbial razor that is gripped by a drowning man in general can do more harm than good.
If you do not want to use the pawnshop services, you should familiarize yourself with the offer of loan companies
An alternative to a loan at a pawnshop can be a loan from a loan company that specializes in borrowing money secured by a car. The main collateral of the loan will in this case be the transfer of ownership of the car. The appropriation consists in the fact that the vehicle (or a fraction thereof) becomes the property of the lender. When you decide on this form of security, you must take into account that next to your name in the car registration certificate will also appear the name of the loan company. When you repay the commitment, all vehicle ownership will be transferred back to you.
Unlike a loan from a pawnshop, when you borrow money from a loan company you will be able to use the vehicle in the standard way. This method of obtaining the necessary cash will not force changes in your everyday functioning. You will still be able to commute by car to work and use it for profit.
A loan with car security can be obtained by a person with low scoring in BIK and one whose data is entered in the registers of Economic Information Bureaus. At the loan company, you’ll be able to borrow up to tens of thousands of USD, and spread the repayment into monthly installments tailored to your financial capabilities.
The requirements that potential borrowers must meet are not excessive. In order to receive money, you must provide the lender with an ID card and a second photo document (e.g. driving license), registration card and car insurance policy. For higher amounts, you may also need to provide an AC policy. In most loan companies, the car being the collateral cannot be older than 12 years.
If you do not return the money on time, the loan company, as the vehicle owner, will be able to manage its release from you. If, according to the contract, the lender takes over your car, you will still have a chance to recover some of the proceeds from its sale. How is this possible?
Before you borrow
Poorly thought-out, emotional decisions can have extremely dramatic consequences. Remember that even in a very difficult situation, the best adviser can be calm and substantive analysis of possible solutions. A loan taken out through an honest, proven lender will prove to be real support for you and put your business on its feet. Even if you need extra time during the repayment period, it is usually possible to extend the repayment date.