Risks Involved With A Car Title Loan
Car Title Loan
A car title loan is basically a short-term loan against your car title. Your car title is used as collateral in this form of lending. It is supposedly a helpful means of getting a loan when you have bad credit, and are in dire need of instant cash. The loan is typically due in 30 days from the date of your signing over the title of your car and giving the lender a copy of your car’s keys.
However, many consumers have classified a car title loan to be a form of ‘predatory lending’, as the interest rates on car title loans is extremely high, as much as 25% per month! There are other associated fees as well, including processing fees, late fees, document fees, lien fees, and origination fees.
If you are unable to pay back the principle amount of the car title loan plus the unusually high interest amount, you can take a month more and pay the principle and interest for a month. This is called ‘rolling over’ the loan.
You can also be given the option of paying a set amount of interest for a given period of time. This form of interest-only payment for a period of time is called ‘balloon payment’; however, you still have to pay back the original amount anyway.
If you are unable to pay the loan even after ‘rolling over’, or undergoing ‘balloon payment’, many companies can remotely shut down your car after the due period as they have perhaps installed a GPS system in your car when you signed your car title loan.
The other way of getting away without paying the borrowed amount is by letting the lender repossess your car and sell it for a profit. Some companies can even take you to court if you cannot pay back the principle borrowed with the full interest, and ask for the money – all of which will cost you a lot more than what you bargained for!
Companies offering car title loans would make themselves clear by saying that they are helping people who are otherwise unqualified to get financial assistance. However, a car title loan is an extremely risky method of getting some cash, as your car is the first or the second (if you own a house) most valuable asset for you. And putting it to stake for less than even half of the value you paid for your car is not a very good option to consider.
Tips on how to Deal With The Snares of a Car Title Loan
Title Car Loans
Truth be told, you will do anything to land some cash in times of dire need. This includes using your car title to secure a loan. Though it is a bad idea to take a car title loan, there are ways that you can beat around the demerits and walk away a happy person. This article will focus on the disadvantages of car title loans and how you can avoid falling into the mean hands of the lenders. This article is however not meant to incite risking your car.
Signing up your car over for a high interest loan is a malignant financial tumor. It eats away on your financial portfolio in a way no other financial issue can. But what do you do in a situation when you seriously need cash but cannot get any from the banks due to your bad credit score? The best of us who own a car will be tempted to apply for a car title loan. They are attractive as you see in the commercials but if you sign up for a high interest auto title loan, then you are in for ride through a financial quagmire.
The major risk in car title loans is you may lose your paid-for car in the process. The process of application is straightforward as all you need to do is sign over your car in exchange for cash from the lenders. The amount you receive might not necessarily commensurate the value of your car. It will hit hard on the chest losing your truck to a truck title loan worth $8000. Though there is need to be alarmed, you can always work your way around obstacles, it makes life worth living.
Only take a car title loan if you are certain you will lay your hands on some money before the repayment period expires. This way you will escape from the lenders snare. That’s not all, you may land some money right, but you may be tempted to utilize it in other ways. If you seriously don’t want to lose your car, you will repay the car title loan first before embarking on other expenses. Cash loans for car titles always tag along very high interest rates. You can be sure, the longer you wait, the larger the car loan will get.
Car Title Loan Hints
If there is one thing we all know about the future it’s that there is no predicting it. Financial stability is a thing most people search for but very few find, and unforeseen times when there is an urgent need for cash. It could be to clear off some payment, or to buy something really essential that can’t wait. If you are without the financial ability to do it, you can always go for the car title loan.
By description, a car title loan is a simple loan with a car title loan company. You give the company your car title, which they hold as collateral, as they give you the cash you want. It’s really convenient since unlike banks, the processing time is very short, and almost instant. It’s advised that whenever you hit a brick wall in your finances and your monthly paycheck has not come in the mail, you can always go for a car title loan, but with the certainty of being able to repay it after your expected funds are at hand.
There are several advantages tied to the car title loan. First thing you need to know is that the loans have different repayment periods. In the natural it’s anywhere from 14 days to a month depending on how long you need. Increased periods after that usually demand for more interest rates and that’s best avoided. The car title loan is something you need to settle a mortgage payment, or for an emergency visit to the dentist, which you can be able to settle, say after your check is processed, and not something you will take a couple of months to repay.
When going for a car title loan, you have to be very careful about the terms and conditions. You need to read through them all and fully understand before binding yourself. You have to be comfortable with the interest rates because a car title loan is usually short term thus the rates are somewhat high.
But even with the sternness in conditions, a car title loan has its share of benefits. For one, unlike all most other kinds of loans, your credit history is not important. Bad creditors qualify for these emergency loans. Needless to add at this point, for car title loans to go through, the car has to be registered under your name. If you ever find yourself financially tangled in the future and in an emergency need, you might want to consider a car title loan as a viable alternative.