Car pawn loans
Car pawn loans are short-term contracts that usually last for 3 years or less (however in most cases the duration is up to 6 or 12 months) between the lender and the borrower. As contract is usually short-term and the main purpose of such borrowing is to solve short-term financial debts. It is not advisable to use car-pawn to long-term financial distress solvency as the interest rates are sufficiently high compared to those offered by bank and other credit institutions.
Person who needs money surrenders the car for the duration of the loan and gets necessary money instead. In other words, he is using the vehicle as a collateral and the loan is secured in such way. The amount received by the borrower depends from the value of the car or vehicle. It is possible to lend up to 60 – 70 % of the car market value. Interest rates varies from 4% or 5% to 10% per month.
Person who wants to pawn his vehicle must be at least 18 years old. Moreover, he must be the owner of that vehicle and must reside in UK. One of the main requirements to get a car pawn loan is that the vehicle must have no outstanding debt attached to him. In some occurrences it is possible to get the loan if the car is almost debt free, but in such case it is likely that the credit amount that is possible to get will be smaller compared to when the vehicle is fully paid. Moreover, most car pawn companies require full insurance coverage on the vehicle that is going to be used as collateral and Valid Road Fund Licence is also needed for the vehicle that is going to be used for car pawn.
How to get car pawn loan?
Application process is quite simple compared to the one necessary to get the credit from the bank or other financial institution. First of all, it is possible to apply for car pawn online on the lender‘s website or another way is to call to the contact number provided.
Then an individual must provide certain documents in order to get the loan. He must have original logbook, copies of MOT and vehicle’s insurance. Moreover, some lenders require to present at least two utility bills on the car not older than 3 months. Furthermore, contract copies of driving licence and passport are required.
The lender will not keep all of the documents that are required in order to sign the contract. Car pawning companies usually tend to keep the original logbook for the term of the loan. Moreover, the borrower needs to provide the lender with spare car key, current MOT and all Service Books. It also must be remembered that as long as the debt is not repaid, the car pawning firms are going to keep vehicle as collateral and if the person is unable to make the payments, the car possession will transfer to the lender’s side.