Car Title Loans: The Things You May Not Know About Them
People often opt for car title loans because of two reasons: it only entails simple documents from the borrower and loans can be released as fast as 24 hours after the application.
For anyone who owns an outright vehicle, this is somewhat the perfect solution for their financial emergencies.
These are two of the most common advantages (and probably enough reason for you to get one with your vehicle) of getting a car title loan but aside from these, do you have other ideas about car title loans?
Read on for you to learn more.
Interest rate grows as the loan extends.
Borrowers are expected to pay their loans within the 30 day period (maximum). If they can’t, they have the option to extend their loan.
- However, if a borrower continually extends his loan, his interest rate also increases. Yes, interest rates for car title loans are small – in the beginning.
- If a borrower still cannot pay for his loan, even with the frequent extension, the lender will have to sell the vehicle as an immediate payment for the borrower’s overdue loan
Borrowers can lose their asset.
Similar to other secured loans, the risk of losing an asset is relatively high with car title loans.
- The borrower’s vehicle is used collateral in the process, giving the lender the legal right to access or take away the vehicle.
- As stated, the lender can also sell the vehicle in cases when the borrower fails to pay his obligation in the given timeframe.
- If the sale is lesser than what the borrower owes—well and If the sale is higher than the debt, the lender gets to keep the full amount as well.
Borrowers are triggered to make hasty decisions.
Some friends have made car title loans over time, and they occasionally rave how easy it was for them to get money. Because of the low interest and simple processes involved, a lot of people are triggered to make hasty (and wrong) decisions.
- A car title loan is not all that bad, but a borrower should think carefully if this is ultimately the best option for his need.
Borrowers are charged with higher interest rates.
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There are other financial institutions which offer loans and only require borrowers to earn minimal interest rates.
- Since most of these institutions have complicated processes before a borrower can enjoy its loan, people would often choose to transact for a car title loan.
- Car title loan requirements are easy to comply, but the interest rates are higher compared to other banks.
- Some lenders charge their borrowers 25% per month for financing. Borrowers should consider this carefully.
Now that you know more about car title loans, you might want to consider these points before filing an application:
Ask for referrals.
It is always a good idea to ask from friends which companies they were able to transact with, especially if this is your first time.
- Get a list of companies which offer this service and study its background.
- Ask the companies if they have options suitable for your vehicle and payment schemes.
- Some companies might abuse your “innocence” in the process and may charge you with many
When looking for an auto title loan near you, consider you may want to consider www.FastTitleLoansNearMe.com . They not only have a list of nearby lenders but also offer an online solution that’s very quick and painless.
Ask for detailed quotes.
- Once you narrow down your search for the possible companies you want to do business with, ask for their detailed quotations.
- You may compare these with other companies as well, but you have to make sure that you can get the best out of your loan.
- If there are fees or terms which are new to you, do not be hesitant to ask.
- You are dealing with money here, so you want to be as meticulous as possible.
Ask about interest rates.
- Just like any other type of loan available, you have to pay the principal amount of the loan but do not forget about the interest rates.
- Since a car title loan is meant to be paid within a short period, interest rates are slightly higher, which can range up to 20%.
- Choose lending companies who offer the lowest interest rates.
- Some companies might provide small interest rates in the beginning but will gradually increase the moment you ask for extensions.
- The quicker you pay your loan, the better.
Whatever you do, there will always be pros and cons – nothing in this world is all good or all bad. If you seriously need money and you only have car title loans as your option, go ahead.
However, you have to understand that it’s a risky decision because it involves your time and asset, so think carefully. Ask your friends around, search the internet for any forums which have these types of topics and learn from it. It is always better to educate yourself first, before taking the possible risks that come with your financial decisions.
Disclosure: The information provided by The Financial Genie is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other professional to determine what may be best for your individual needs. The Financial Genie does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. Additionally, some of the organizations with products on our site may pay us a referral fee or affiliate commission when you click to apply for those products.