Imagine, if you will, that you have a newly completed project car, a 1972 Dodge Charger. You also have your “weekday” car, a 2009 Nissan Sentra. Both are paid off, both are in your name. However, a blizzard of snow collapsed your roof, you need cash now and have to pick one as collateral on an auto title loan.
Which do you choose?
The answer may not be what you think at first. Before blindly picking a car for something as important as a title loan, there are a couple of factors one must take into consideration when deciding which car they’ll use:
- How much money do you need?
- What is the market value of the car?
In the example above, your roof collapsed. According to AngiesList, replacing a roof can cost an average of $12,000. But your calculations shouldn’t stop there. What above the costs of replacing damaged furniture? Lighting? Clothes? Do you need to stay in a hotel?
Those are the types of calculations you’ll need to do before moving forward with an auto title loan. If you need money for an emergency trip, don’t just look at the plane ticket cost. Consider the food, lodging, gas, and incidentals that inevitably will occur. If you have an unforeseen medical expense, consider not only how much it’ll cost, but how much money you may lose from being out of work or the initial cost of medications. If you plan for everything, you shouldn’t miss out on anything.
In our example at the top of the page, we said you had a 1972 Dodge Charger and a 2009 Nissan Sentra, both paid off. Now is when you must consider the market value of the car. What you may think a car is worth and its actual market value may differ.
For the Charger, depending on the engine and body type, you might see them selling for around $32,000 by collectors. However, according to Hagerty, an insurance company that specializes in classic cars, a 1972 Dodge Charger might be worth as much as $19,000. That’s quite a difference!
A 2009 Nissan Sentra, also depending on body and engine type, could sell for up $14,000 in some places. However, according to Kelly Blue Book, at a very good condition it’s valued at about $8,500.
So, which car do you choose? Well, not including all related incidentals, replacing a collapsed roof would on average cost you $12,000. The estimated market value of the Dodge was $19,000 and the estimated market value of the Nissan was $8,500. In this case, you should choose the Dodge as the car to use as collateral for your auto title loan.
Now, before you start worrying about weekend cruises in your imaginary classic car, one thing to remember is that you get to keep driving your car with an auto title loan. You keep and drive your car and the lender only affects the title and registration as lienholder until you pay the loan off. It’s just like when you’re making payments on any other type of auto loan.
There are, of course, other considerations you must make before deciding on an auto title loan. But if you narrow in on your need and which car to choose, it could make the process that much easier.