Are Car Title Loans Worth It?
If you find yourself in a situation where you need a significant amount of cash quickly, you may be looking at the various lending options. One of those might include a title loan. A title loan is a short term agreement, in which you are offering your vehicle as collateral for a loan that is comparative to the general value of your vehicle. Like any other option available to you, title loans come with their own set of pros and cons. Are title loans worth it? That depends. You will want to carefully consider the following before you decide if a title loan is right for you.
Title Loans Pros
Let’s face it, title loans are easy to come by. As long as they are allowed in your area and you fall within some general guidelines, it’s relatively easy and quick to get one. The reason for this is that lenders usually look at the value of the vehicle and your ability to pay back your loan, over qualifiers such as your credit score. While your credit does play a small role in the approval process, lenders are still willing to enter an agreement if they can see that you are capable of paying back the loan under their terms. Usually, they will want to see that it is fully (or almost) paid off and that you have proof of income and address.
A huge benefit to getting a title loan is that lenders do not usually hold on to your vehicle during the life of your loan. So, you can continue to drive your car, as long as you are making regular payments. You’ll turn your title in to the lender so that they can place a lien on the vehicle, but unless you default, you’ll still be able to utilize it.
Because the lenders themselves are involved in the approval process, most applicants walk out with a check on the same day that they apply. This can be a major benefit for those who are need money immediately, with very little time to spare. And, because the loans have shorter terms, the payoff period is usually quicker.
Title Loans Cons
You will want to be very careful when deciding which option you will use when it comes to title loans. There is very little regulation for interest rates on this type of loan. Typical rates range from 200-400%. Some companies also structure their loans to make it very difficult to pay back, charging you additional interest and penalties for early payments. Repossessions are very rare, but they can happen if you are unable to make your payments. Hidden fees are an unfortunate aspect of borrowing from less-than-reputable lenders. This, of course, brings a risk to the industry that can turn people away. For this reason, it is extremely important to research the companies you intend to borrow from. Fortunately, there are services like Max Cash® Title Loans. We work hard to eliminate the bad options, so you can trust your lender.
Before you get into a commitment that you cannot afford, it is a good idea to check out all of your options. If other opportunities, such as credit cards, consumer loans, and personal loans are not available to you, a title loan might be a good option.
Fortunately, there are reputable lenders and brokers who are available to side-step predatory lending and offer a better solution. Max Cash Title Loans offers a loan calculator to help you determine how much you can expect to pay back. Using a brokerage service helps take some burden off of you, so that you can be confident that you are entering an agreement with a legitimate lender. In addition, it is a good idea to have a list of questions ready, so you can make sure you fully understand your terms.
Are car title loans worth it? Above all, arming yourself with education is the key to answering this question. If you would like to have more information as to how title loans work, check out the Max Cash guide, or give our reps a call at 855-561-5626.