Car Title Loan Expert

The basic idea of a car title loan is that you will be asking to borrow money by using your car as the collateral. They are generally used by people who have a history of bad credit and who are unable to secure most other types of loans apart from payday loans and the like.

If you miss a payment then, depending on the deal you negotiated with the lender, you run the risk of having your car taken away from you. If it goes even further than that and you default on the car title loan then you may get your car repossessed.

So, what are the pros and cons of getting this type of loan? That is the question that I will be exploring in this article.

Quick Tip:

“As with any financial decision, you should show extreme diligence before you make your decision and really weigh the pros and cons.”

Small Loans

It is important to note that car title loans are normally going to be only for a relatively small amount of money. In general you can get up to 50% of the car value if it were to be sold today. Although it is sometimes possible to find a lender who will go higher than 50% you will most likely be required to pay at a higher rate than usual.

An auto title loan is no different than any other loans when it comes to interest rates since they reflect the risk that a lender is taking on you. The higher the risk, either in terms of your credibility or the cash amount that is being sanctioned, the higher the rates will be.

Loan Requirements

One of the minimum requirements for taking out a car title loan is that you actually own the car. This may sound obvious, but it means that your car must not be tied in to any other type of loan such as a regular car loan. Many financial institutions will also require you to have full insurance coverage on the vehicle before receiving auto title loans.

A car title loan is usually a very short term loan, which can even go as low as one month, but that is actually not such a bad thing considering how high interest rates can be. It is not uncommon to see an interest rate as high as 600% and even a rate on the lower end of the scale is usually still in the triple digit range. This makes it extremely important that you are able to pay off any auto title loans in a timely manner.

So, as you can see here, a loan for your car title can be a decent type of loan for those with either bad or no credit history but they must be handled with care. If you lose your car then you may also lose your job, which could send you even deeper in to debt, so be careful and of course do your research ahead of time.

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 cash loan for car title 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.

Rolling Over

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.

Terms & Conditions

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 loan for your car title 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.

If you are one of those that think that an auto title loan will never be needed, I must give you a wake up call to reality. 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 can be 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. You are your own boss, and as such you are the one who should decide whether an auto title loan is a good idea or not.

Show Caution

Signing up your car over for a high interest loan is a malignant financial tumor. It might end up putting you in debt and leaving you without a car in a way very few financial options could.

But what do you do in a situation when you seriously need cash and 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 them in commercials, but if you sign up for a high interest auto title loan, then you are in for ride through a financial quagmire.

Weigh The Risks

The major risk in car title loans is you may lose your paid-for car in the process. And the auto title loan will only give you but a fraction of your car’s cost. The process of the 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 after all.

Know The Differences

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. Any cash loan for car title always tags along very high interest rates. You can be sure, the longer you wait, the larger the car loan will get.

So, before you put your signature on an auto title loan application, remember to consider your future finances, and always read the fine print carefully. Most lenders who offer auto title loans know that they are one of your last options and that you are most likely desperate, so they might try to take advantage of that fact by making you sign with unfavorable terms.