Pawn Cars for Cash Vs. Car Title Loans
When in need for some emergency cash, it is not uncommon for most people to think about pawning precious jewelry, electronics, gold, or any other valuable items at a nearby pawn shop. Another possible option people also use is to pawn cars for cash to meet their financial needs.
When it comes to pawning vehicles, there is usually a confusion between what it means to pawn a car, and getting a car title loan. These 2 concepts are not the same even though they both allow you to get some quick cash for vehicles. In this article, we take a look at the difference between pawning vehicles and obtaining car title loans, to help you make informed choices while trying to make some cash from your car.
A Car Pawn Shop
Car pawn shops are very similar to used car dealerships in that both of them buy and sell second-hand cars. Given that you own a vehicle that has been paid for fully and you possess a clear and free car title, but want to get some quick cash from it, you can take your vehicle to an auto pawn shop near you and exchange it for cash.
Once you have sold the vehicle to the pawn shop, you go home with the cash that same day. In this case, no loan applications or credit checks are required. The car pawn shop dealer will value your vehicle based on its model, year of manufacture, mileage, wholesale price, among other factors to make a decision on the most suitable buying price.
What if you change your mind and want to have your vehicle back? In this case, you just pay back the auto pawn shop dealer the amount he/she paid you, plus a set fee (normally a percentage of the total amount you paid).
A Car Title Loan
Now that you know a bit more on the concept of pawn cars for cash in an auto pawn shop, let us look at title loans. A car title loan is totally different from pawning a vehicle. The similarity is that both situations require a clear and free car title, and the amount of money you get is based on the value of your car.
Getting a car title loan is similar to visiting a car dealership and choosing to finance a car. In other words, you are choosing to borrow money against the equity in your vehicle. You retain the car ownership, and your lender puts a lien on it. In case you are unable to pay back the loan you borrowed, the lender is mandated to take the vehicle and sell it to cover the loan. However, car title loans are not legal in Colorado.