Are you out of cash? How bad do you need it? Good thing there are many possible ways to have some money, and that is through loans available. There are payday loans, auto title loans, mortgage and so much more. Among these, the auto title loan is the most popular. So, how will you know if it is right for you?
What is an Auto Title Loan?
An auto title loan is a type of secured loan for which uses your car as collateral. So if you fail to pay the loan on time, the lender will take your car. This is the reason why it’s easy to get this type of loan because the lenders have a fall back in case you fail to pay.
The Advantages of Auto Title Loans
When talking about auto title loans, consider its pros and cons. These are the things that we need to consider in getting one. Let us start with its advantages. What are the benefits of auto title loans?
The advantages of it are:
You can get money easily.
They are easy to get than bank loans. As long as the requirements are complete, you can get the cash as soon as the next business day.
You can drive your car even with a loan.
You can still drive your car even if you have it approved for a loan. This is what many borrowers like when it comes to this kind of credit, you have borrowed money using your car as collateral and yet you can still use your vehicle.
Credit doesn’t matter
The loan is based on the value of the car. Thus, you can still be qualified for a loan even if you have bad credit. Most lenders only allow borrowers to borrow 30 to 50 percent of the car’s value so it will be easy for them to make up for the losses when the borrower fails to pay.
If there are benefits, there are also drawbacks of availing auto title loans. What are the disadvantages of availing this type of loan?
So here it is:
The Disadvantages of Auto Title Loans
Have higher interest rates compared to other loans
Lenders charge almost 30% per month of interest in every auto title loan approved. The reason for this is the high risk that lenders face in lending cash to borrowers with low credit score. Lenders charge high-interest rates to match the increased risk.
Shorter Loan Terms
Auto title loans have repayment schedules and quick loan terms compared to other loans. The reason for this is that lenders could get their money back with interest and be able to lend it to others.
Unexpected Fees
Late or missed payments can have high penalties. If not paid on time, it will stack up, and it will be hard for the borrower to pay the loan entirely.
Possibility for Repossession
Since lenders don’t consider borrowers who have bad credits, there is a significant chance of repossession. This is due to the high-interest rates on auto title loans which makes it harder for borrowers to pay it off. If you do opt for this route, then developing a good understanding of the Massachusetts Vehicle Repossession Law (or whatever legal jurisdiction is in place in your area) would be wise to prevent as many issues as possible should something go wrong. Remember that borrowers won’t have bad credits if they pay well.
Requirements To Get An Auto Title Loan
When applying for a loan, these are the requirements that you will need to submit:
- Car registration
- Car Clear Title
- Record Of Income such as payslips or bank accounts
- Proof Of Residence such as utility bills
- Government issued ID with photo
How To Apply For An Auto Title Loan
Applying for an auto title loan is very simple. All you need to do is search for companies that offer this kind of loan. Here’s a step by step guide:
- Before heading to the lender’s office, get an estimated appraisal online. Doing this could inform you on how much money you can loan up.
- After reviewing your estimate, head to the branch of your preferred lender company.
- Make sure to bring all needed requirements for faster approval. When the application has been processed well, you can get the loan within 2-3 days.
In a nutshell:
So, the big question now is, are auto title loans an excellent financial idea? Well, it is up to you to decide. Like any financial loan offerings in the market, it has its fair share of pros and cons. Although they can be a great solution to your economic problems, you have to carefully assess if the financial obligations that come with an auto title loan are within your paying capacity.
Before taking the risk, review the key points we’ve outlined in this article. You can also opt for professional advice from a finance expert you trust. If you do end up needing an auto title loan, you should check out Fast Title Loans Near Me to be linked up with a lender near you.