Title Loans

For some time now, there had been some frequent discussions on how obtaining a title loan could be a bad decision for many, especially the poor. According to reports, more than 1.1 million US households were said to have resorted to borrowing auto title loans for instant cash. Well, if that is the case, the immediate curiosity that arises in one’s mind of course is , how come so many people resort to title loans till now, if it is indeed hurting the poor.

This topic is going to highlight some of the key points to prove that maybe title loans are indeed not at all hurting the poor, maybe those who borrow a loan, need to be a little bit more strategic to avoid facing any such troubles in future.

Let us consider one example to understand what I am talking about here. If you have ever taken out a loan before (other than title loans), what was the main concern that ran through your mind, once you have managed to utilize the loan fruitfully? To pay it back of course. You have managed to obtain some kind of savings or maybe chalked out an organized plan to ensure that the amount borrowed is paid back successfully on time. Same is the thing you would have to do when you borrow a short term cash loan, like the title loan.

Title loans

A title loan does come with some difference that makes it the most desirable option people choose over other traditional loans. They are short term cash loans, does not require any proof of credit history, can be obtained instantly within 24 hours and you need only your vehicle (which you can drive even after putting it on lien) that works as a collateral. Some reports claim that after some borrowers sign on the agreement paper and drive off with his/her vehicle, it is then that they realize that their decision could lead to car repossession or financial trouble.

First of all, car repossession only happens when the borrower is unable to pay back the loan after a specified time period. In that case, your car acts as the ultimate resort to pay back your debt. Besides, there are some title loan lending firms that provide loans to people that befit their income and time line. In addition, some firms also have a ’30 day money back guarantee’ scheme, in-case you are unsatisfied with the line of credit. So, you can see there are companies that look into your concern as well.

You can start with doing a proper research on the auto title loan lending companies, found within your neighborhood.

Speaking of having a systematized plan to handle your loan, there comes some additional benefits when you can try to pay back your title loan early, instead of waiting for the deadline to come for each month.

Benefits of Paying Off Before The Deadline

By paying off early, you can do away with making payments on a monthly basis. However, you need to be aware that you don’t get penalized for making additional payments before hand. Ask the company representative regarding this first.

An early payback of the loans can help you to build up a good credit history. This could come handy in future, if you ever require the title loan lending company to raise your credit limit. In such a case, some companies determine the credit limit by reviewing your vehicle value as well as your credit history.

When you make an early payment of your loan, it creates another opportunity for you to utilize your savings for some other purpose.

How To Make An Early Payment Of The Borrowed Title Loan

Pay A Little Bit Extra Each Month

Try to pay back a little bit more than what you pay per month. If you have to pay a minimum of $200 per month, then you may consider paying an extra amount of $100. This will help you to speed up on your loan payment by 50%.

Make Twice A Payment Per Month

Making double payments per month can help you to shed off some of your debts that you are to pay. This can help you to pay less amount of interest and you would be able to make an early start, by paying off an amount of two months.

Pay Off Your Amount In Round Figures

Making a round figure payment helps you to save a lot on the interest amount. That is, if your monthly payment is $314.50, then you can round it up to $400. This helps you to pay off an extra amount of $85.5 at the end of twelve months.

Title loans are designed to come as a resort for those who are unable to apply for a traditional loan, owing to bad credit history or because it would be time consuming. It is a short term loan and hence you should not mix this up with those that can be used for long term purpose. Besides, every title loan firm ensures that you know the terms and conditions before applying for a title loan. So, make sure that you get your queries straightened out before applying for one. They are always happy to provide you with information to your every question.

Advantages of car title loans

The car titles loans are not complex and do not involve any lengthy process. Since, you will be required to submit a collateral form, so car loans are relatively easy to get your financial aspects qualified. Rest assured, even if you do not have an excellent credit score, you can still opt for the best title loan that fits in your requisites. As long as you can show that you have access to a reliable source of income and a car worth more than your loan you are requesting, nothing can be difficult for your title loan process.

Secondly, you can also consider opting for a car title loan if you are in need of money immediately. As soon as you and the lender agree to the terms and conditions of the loan amount, you can immediately receive your cash. In many cases, you can also see that people walk out of the lenders’ office with money in hand on the date on which they apply!

Finally, since the lender has to place a lien on the car’s title, and does not keep the vehicle itself, you can also continue to use the vehicle. Remember that you can use the vehicle while you are repaying the loan amount. Indeed, you will use the use of the vehicle if only if you default on the loan, and the lender insists on reposing on your car!

Disadvantages of the title loans

The first and foremost point to take your attention to is that car titles loans often carry exorbitantly high-interest rates. In some of the cases, these interest rates are significantly higher than the credit card rates. Yes, it is true! With some of them even exceeding more than 100 percent, the rates can be the first thing to consider.

Indeed, there are some states which have laid down the laws that prohibit exorbitant interest rates. Yes, you can find some of them, but still, many do not! The car title loans are also considered to be short term loans, which means that they may be rapid quickly. If you are unable to make payments, late fees raise the balance even higher! Eventually, you will find that the lender repossesses your vehicle, and thus, it may lead to host some other problems.

What can be some are title loans alternatives

You can consider various alternatives to the title loans for your financial terms. We have enlisted the following options for you to make it even simpler.

Credit union loans

The credit loans are one of the best alternatives for the title loans as they are considered one of the best short term loans. It is specifically designed to help its members to make the various purchases that they need! These institutions are focused mainly on the customers, and they might be more likely to cooperate with you and so they can help you out with the small loans easily.

Credit cards

If you are managing your finances in a responsible manner and you are opting for making the payments on time, you can use the credit cards to help you ion time of need. You can also open a credit line with a low-interest rate and use in your financial needs and purchases. Some credit cards also allow you to balance the transfer of the balance from one account to another. Remember to check out the details carefully, such as the terms for penalties, fee payments, and limitations, if any!

Selling your possessions

Sometimes, this option can also be one of the sought-after solutions for you if you require money immediately. While you say goodbye to some of your valuable possessions, you can have cash inflow in no time as it is one of the quickest ways to get money, if in need! Just look around your house and sometimes identify that can qualify for this list. You can also consider placing ads on eBay, Facebook Marketplace, and Craigslist!

So, now concluding with the topic, how about resting on the views on the risk of getting into the clutches of a title loan? Indeed, this can be an excellent idea.

Why are car title loans risky?

You can think of the car loans like the payday loans’ bully brother! Yes, that is true!

While you can find that the interest rates of the car title loans are much less than the payday loans, but on the whole, they will stand at the same level. For instance, the APRs upward of 1000%, but in this case, the upper limit of “affordable” is generally set at 36% APR! Putting it straight, the fees and cyclic borrowing of the car title loans make them even expensive.

And the worst part is, if you are not able to pay the car loan, the vehicle is gone! In fact, if you can believe, around 20% of those who take on the short term, a single-payment car title loan will have their cars repossessed. This is according to a report of the Consumer Financial Protection Bureau!

The bottom line

With the correct approach for taking a car title loan, you can actually prove it a resource and helpful in the short run! Get the above rules to follow for the successful usage of the title loans for your finance.