A title loan is a type of secured loan where borrowers can use their vehicle title as security for repayment of a loan. Essentially, these loans are designed for individuals who need cash fast to pay bills or manage debts. It is thought that more than 2 million people, 1% of Americans, use high-interest title loans annually, borrowing against their vehicles, but what is the fuss about?
Everything you need to know about a Title Loan
A title loan is a short-term, high-interest loan and as this type of loan lets borrowers use their vehicle to secure the loan repayment, the lender can repossess your car if payments are not met on time. It is suggested that you apply through a lender that offers one as long as you own your vehicle outright. It is vital that you show the lender your car, proof of ownership as well as your license.
If approved for a title loan, you will then exchange your car title in order to secure the loan. These types of loans typically have terms of 30 days, meaning you will make one single transaction at the end of the loan period. It is important to consider that alongside your borrowed amount, you will be required to pay additional interest and fees.
Why do you need one?
Title loans are essentially designed for people who need cash fast to pay bills or cope with an unprecedented emergency. Yet, this option to access quick cash is not necessarily the best option as you will encounter high fees or risk losing your car outright. The advantages of this type of loan are the uncomplicated process in order to avail of a title loan due to the collateral side of things. Hypothetically, this means you do not need a healthy credit score per say to take out a title loan, as long as you can show you have a reliable source of income. The downside to a title loan is the high-interest rates the loan carries, alongside the fact that these loans are short-term and therefore are required to be paid back rapidly. The worst-case scenario is that the lender can repossess your vehicle, leading to further issues.
In 2015, it was recognized that there was a need for a real sense of honesty surrounding this option, and this company in texas for car and title loans was set up, known as Texas Title Loans. Here, they directly work with both retail and online lenders in many places across the United States such as Dallas, Houston, and San Antonio. At Texas Title Loans, they give consumers the chance to access assistance from the beginning of their application to the end, determining which company is best suited to you personally, leading many Americans on the right path, and ensuring they have found a lender that aligns with their needs.
You should always look toward alternative financing methods before taking out a title loan. According to CFPB, 20% of car title loan borrowers have their car seized when they can’t meet the repayments. Car title loan lenders make the majority of their business off borrowers who take out new loans in order to pay for the old ones. Some alternatives include payday alternative loans offered by credit unions as they are similar in nature to a title loan yet do not require collateral. Likewise, a personal loan is a quick way to secure cash with lower interest rates in comparison to a title loan – nearly 36%. It is important to take caution and thoroughly research before making such a commitment.Read More