pawning your OR/CR

Interested in pawning off your car’s OR/CR? Better read these tips and warnings before moving forward with that decision. 

Pawning your car’s title (OR/CR) is possible. However, there are some risks involved. Before considering it as an option, make sure that you have your finances in order and have the capability to pay. Pawning off your car’s title should be a last resort in the event that you will need cash.

What you will need

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Here is where it gets a bit technical, typically a loan company will ask for the original OR/CR of the vehicle, proof of billing, proof of income, and at least two valid IDs. This is usually the minimum needed for a title or OR/CR loan. 

The OR/CR must be in the name of the person applying for the loan. For second-hand vehicles, an absolute deed of sale can be allowed in place of the OR/CR. This serves as proof of ownership and that the vehicle has been fully paid for.

If the vehicle being pawned out is under financing or is encumbered in a bank, the loaning company can offer a buyout for the vehicle. Depending on the company, they will offer certain percentages for the buyout. This is ideal for those who want to keep their vehicle and don't want their unit to become foreclosed.

Inspection and loan terms

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Once the documents have been submitted and checked through, a sales associate or inspector will inspect the vehicle and conduct an assessment. The assessment dictates the value of your vehicle and in turn, how much you will be able to get out of your pawn.

The value of the vehicle will also depend on its market value. Each loan company may have differing opinions about your vehicle’s market value so take note of the assessments. The market value will also depend on the mileage and general condition of your vehicle. The better it is the more likely you will get more for it. It's also best to do research on the market value of your vehicle as well so you will know what it's actually worth. Once the terms between you and the company have been sorted out, they will then proceed to give you the money for the pawn. The money given will either be in the form of cold cash or a check.

What happens next?

Next, either the company will take and store your vehicle, or you can opt to still use it under certain conditions. For this added step, extra paperwork may need to be filled out. This may include an application for extra insurance that will be shouldered by you during the duration of the pawn. 

If you choose not to use the vehicle and let the loan company take care of it, keep in mind that they will most likely put the vehicle into long term storage. It means that the vehicle will be parked for a long time, depending on the duration of your pawn. Keep in mind that not using a vehicle for extended periods of time will cause the battery to lose its charge and the fluids to slowly degrade.

Risks

Risks of pawning your items start with high-interest rates. The typical interest rate is about 3-4% but some pawn shops may charge you 10% interest monthly. Annual interest rates, on the other hand, can be anywhere from 40% all the way to 240%. There are also other fees involved with the borrowing process.

Another risk is low appraisals. This will depend on the loan company but you might be getting less than what your item is actually worth. The loan amount may even decrease if the company opts to charge you immediately for interest. It means that part of the interest will already be paid for prior to the company giving you cash.

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Loan periods are another added risk when pawning off your OR/CR. These periods can often be short and failure to pay off the loan may result in an extension of the loan period. It will mean that you will have to pay off the interest longer or worse, the company may auction or sell off your vehicle in order to fulfill the payment of the loan.

The last thing to look out for when looking to loan out your OR/CR are scams. Be careful where you choose to apply for a loan. Some companies or websites may ask for certain details that are not supposed to be shared such as bank account details and credit card information. Having someone else know about these details could potentially drain your funds without your knowledge.

Things to keep in mind

The value of your vehicle depends on many factors, such as the general condition and other modifications and mileage. When you pawn your vehicle, the loan company also adds interest to the amount. If you still want to be able to use your vehicle even if the title has been pawned you might have to carry extra insurance for it. Consider it as another expense to pay for on top of the title loan itself.

If you really need the cash, then this could be an option for you, however, make sure to do proper research prior and make sure that your finances are in order. Go for big known pawn shops or pawn companies as they already have good and established reputations with the public. Make sure that you can pay off the interest and other fees involved with the loan process. Having the ability to pay off the loan quickly helps reduce the risk of other expenses coming out. So, think about the pawn carefully and consider all your other options.

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