One of the actions that most people consider to obtain money quickly, in the event of an economic emergency, is through “pawn houses” (pledge companies). The first thing we think of pawning are electronic devices, jewelry and even shoes; however, there are those who decide to do it with cars. If you are considering it, we tell you the mistakes you should avoid.
First of all, if you are thinking of lending your car, you should know that the process is very slow, with a lot of paperwork and revisions involved, unlike with smaller objects such as bicycles or video game consoles.
Not knowing the types of loans
Pawning your car means leaving it as collateral to a pawn shop in exchange for money. It is an effective way to receive money quickly, but if the loan is not paid (plus the agreed interest), the pledge company may collect more, auction off the vehicle and even keep it.
Thus, the first mistake that people make is not knowing the two most common types of commitment. The Mexican Association of Security Services Companies (AMESPRE) indicates what these two types of loans are and their respective characteristics:
one. Loan with transmission. The owner leaves his car in the pawn shop, and until he repays the loan, it will be returned to him.
two. Loan without transmission. Here you keep the car but, in companies like Dondé and Monte de Piedad, you need to use a GPS. Despite being a comfortable option, the loan percentage is lower, around 50 to 60%.
Do not compare pawn shop options
Yes, we know that in an emergency where money is needed, it is easy to go through the first loan company that appears, but it is convenient to consider more than two if we want the process to be easy and safe.
The AMESPRE compiled the most common requirements needed to pawn a car. They are the drawer ones and, if any company does not consider them, you should choose another.
Original invoice of the car in the name of the person who pawns it Valid circulation card Have vehicle ownership and proof of property right payments Official identification Proof of address
Each pawn shop will ask you for different requirements, the more they are, the safer the process will be: For example: the Foundation Where requests, in addition to the above, endorsement with original signatures, payment of tenure, endorsement and verification.
On the other hand, the company self loan ask to have an insurance policy for the car and that it is not older than 10 years.
While AutoAdvance, Mount of pietyrequires a mileage of no more than 185 thousand kilometers, an exhaustive review of the vehicle (bodywork, brakes, tires), it must not be for public transport, exceed 3.5 tons, or have border plates.
Another aspect to consider is the loan conditions, that is where the monthly interest rates come in. You also have to compare the terms of commitment and the value that will be granted to the car.
Consider that, in most pawn shops, loans range from 30 thousand to 800 thousand pesos. It is important that you compare all the options on the market, since your experience pawning your vehicle will depend on that.
Finally, you can check that the pawn shop of your interest is registered in the Public Registry of Pawn Shops of Profeco.
Not knowing the price of your car
When you pawn a car you should consider that It will not be valued as an agency one, but as a pre-owned one.
AMESPRE points out that the percentage of loans in pawnbrokers is around 70% of the value of the vehicle in the pre-owned market. Although there are companies like Fundación Dondé and Monte de Piedad that have their own calculation system.
Accept half information
Be careful here. Although the process is long and highly bureaucratic, you must be aware at all times of the details regarding the terms and conditions of the loan, including factors such as storage costs, total annual cost (CAT), commissions and interest rates.
One of the worst mistakes that can be committed when pawning a car is not taking into account that the loan must be paid with interest.
According to the portal specialized in AutoDinero loans, when pawning, you must also consider the Total Annual Cost to be paid within 12 months to recover the vehicle.
Don’t ask all your questions
Once negotiating the loan, it is easy to accept everything that is proposed to us, but it is not ideal. As a customer, you must be heard. Remember that in case of any disagreement, you can go to the Profeco.
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