Pros & Cons of Title Loans
If you need money, you may consider getting a loan and using your car as collateral. While this may seem like a great way to get some fast money, there are some disadvantages to getting a title loan. Before you even think about doing this, you should read these pros and cons to getting a better grasp on auto title loans.
Pros of Title Loans
1. Fast Money
The biggest benefit of getting an auto title loan is the fact that you can get money very quickly. In most circumstances, you simply complete an application and get your money much faster when compared to other types of loans. Usually, the loan is much less than the value of the car, which assists the company if the borrower cannot afford to pay off the loan.
2. Fewer Credit Checks
The reason many people resort to auto title loans is that it’s much easier to get a loan. Most lenders check the borrower’s credit to determine if they’re eligible for a loan through the company. Many auto title lenders don’t check your credit, and bad credit is accepted.
3. Keep the Vehicle
Like a home equity loan, you get to continue to use your property while it’s being used as collateral for a loan. When you use your car as a guarantee toward your loan, you get to keep the vehicle as long as you make your payments.
Cons of Title Loans
1. High Interest Rates
Because bad credit is accepted, the interest rate for car title loans is outrageously high. This situation can spell bad news for people as they pay off their loan. It isn’t odd for auto title loan to be triple digits and sometimes as high as 300%. Even on a small loan of $400 at 300% interest, you’re looking at paying a thousand or more in interest.
2. Repossession Possible
If you cannot pay for your loan, which may be likely as you see the interest compound, you can lose your vehicle. The reason you put your car up for collateral is so that the lender can recuperate some money if you default. Unfortunately, this means your car can be repossessed.
3. Excessive Fees
The most important thing to keep your eye on are excessive fees that can come with a loan. These hidden fees are usually in the fine print of the contract you sign. These costs can include repossession fees if you cannot pay, credit insurance, and so much more. Always check the fine print if you’re considering an auto title loan.
Tri County Title Pawn's Edit/Addition (Not found in original blog):
While the cons of title loans in this blog can be accurate, they do not apply to every title loan company that exists - especially not Tri County Title Pawn!
We take pride in the fact that our goal is to HELP our customers, not hurt them.
Our customers come to us when they're in a financial bind - why would we make it worse? Our goal is to help relieve financial stress while making your title loan affordable to pay back. We want you to get your title back. It's our goal!
Here is how we do that:
We have the lowest title loan rates in our area
Our interests rates can be higher than the interest rates that you MIGHT get with another lending company, such as a bank, but they are NOT higher than our competitors rates. If you happen to find a title loan company with better rates - we will meet or beat their rates! Don't believe us? Come see for yourself!
We provide monthly payment plans that fit your budget
Our company developed a tool that helps create a monthly payment plan for every customer that comes through our doors. Our payment plans are personalized based on the customer and what fits in their budget.
Our payment plans show the break down of the title loan and how your payments are applied to your account every month. You are able to see how much was borrowed/financed, how much interest you will pay every month, what your monthly payment is, how your title loan will decrease every month, and your due dates.
We will never charge a 300% annual interest rate!
As stated above, we want to HELP you, not hurt you! Our interest rates do vary based on the amount borrowed, but the rates are never high enough to be close to 300%. That's a promise.
Repossession is a possibility, but....
Repossession only happens if you default on your account, just as it would if you had a loan through your bank, with your vehicle or house as collateral, and defaulted on it.
We try to work with our customers the best way that we know how. One of those ways is by creating personalized payment plans so you don't default on your account. We do what we can to make things as easy as possible for you, your wallet, and our company.
No Hidden Fees!
All of our fees are clearly explained on the contract and in person at the time of the original title loan transaction. Our fees are not in 'fine print.' If you don't understand the fees that could be applied to your account - ask! We will do our best to explain them to you in a way that is easy to understand.
Tri County Title Pawn is very honest and transparent.
**Any more questions regarding our company and how title loans work? Call or visit us today!**
original website credit: https://autoreviewhub.com/pros-and-cons-of-title-loans/