Is it okay to pawn your car’s OR/CR?

If you are short on cash, one way to earn a little bit of it quickly is through pawning your belongings. It’s a short-term solution if you need money to immediately pay for something due to emergencies. With that said, you can pawn off the OR/CR of your vehicle to get some quick cash, however, there are some risks that you need to consider before you do it. Before you consider this as an option,  make sure that you have your finances in order and can pay. Pawning off your vehicle should be a last resort in case all other alternatives fail.

There are several documents needed if you want to pawn off your car’s OR/CR and the process itself is similar to that of getting a loan. 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 certainA percentages for the buyout. This is ideal for those who want to keep their vehicle and don't want their unit to become foreclosed.

Once you have the documentation in order and have had it submitted to the loan company and had it checked thoroughly by a sales associate or inspector, they will then begin the process of assessing your vehicle. This assessment will dictate the value of your vehicle and in turn, how much you will be able to get out of your pawn.

It is important to note that the value of your vehicle will depend on its market value along with several other factors. 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 research the market value of your vehicle as well so you will know what it's 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 hard cash or a check.

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 will cause the battery to lose its charge and the fluids to slowly degrade

The 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% 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 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 before the company gives you cash.

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 to fulfill the payment of the loan.

The last thing to look out for when looking to loan out your OR/CR is 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.

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 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.