Before receiving emergency funding, the best thing to do is get informed about the ins and outs of the title loan process. When searching for any type of loan, title loans or car title loans may come up. A title loan is a type of secure loan where a car’s title is put down as collateral. Like any other entity in the financial world, title loans have their own sets of pros and cons. Before looking into obtaining a car title loan, it may be helpful to know the pros and cons, and whether they apply to a person’s financial situation. The interesting thing about car title loans is that some cons may be eliminated if an individual goes about navigating their loan in the right way.
The Pros of a Title Loan:
- Quick Funds – With car title loans, once approved, funding could be available the same day or within twenty-four hours after applying. These funds may be able to be transferred straight to a bank account.
- A Large Amount of Money – The value of the loan largely comes from the value of the vehicle. For some, this may mean being eligible to receive thousands or even hundreds of thousands of dollars, much more than other types of loans.
- The Process is Simple – The title loan process is extremely simple and could only take a few minutes depending on the lender.
- Convenience – Most of the time the title loan process may be completed without ever leaving home.
- Accessible For Many – Because title loans are secured loans, they are often accessible for those who usually do not have the option to obtain traditional funding. These groups include individuals with;
- Poor Credit/ No Credit
- No Social Security
- No Bank Account
Car title loans could be given out to these groups of anomalies because of the nature of these types of loans. Lenders have the security of a vehicle and therefore take risks other lenders do not.
- Loan Consolidation- Title loans may be a good option for this as they could provide a large enough amount to eliminate previous debt.
The Cons of a Title Loan:
- Higher Interest Rates – Title loans have extremely high interest rates because of the risks associated with them.
- Lien on The Title– When an individual signs up for a title loan they are signing over ownership of their vehicle. If the loan is defaulted the lender has the right to repossess the vehicle.
- They are Not Available Everywhere in the U.S. – There are some states in the U.S that do not allow for car title loans.
- Fees for Missed Payment – Depending on the contract, missing a payment may add additional charges to the loan. Some states offer rollovers, where a borrower could extend the repayment due date for a fee. This adds an additional cost to the loan.
How to Avoid Some Cons:
A lot of the Cons listed above could be avoided. Knowing how to avoid them may be helpful before considering obtaining a car title loan:
- Budget– Before taking out a title loan, make sure to know exactly how much money can be accommodated comfortably for the payments every month.
- Make Payments on Time –If payments are made on time, then the fees associated with tardiness could be avoided.
- Repay the Loan ASAP- The sooner the loan is paid off the less interest will accumulate.
- Look At Several Lenders- All lenders are different, look around and find one that offers a reasonable interest rate.
- Let the Lender Know If Finances Have Changed- Keeping the lender updated may help them come up with solutions before the loan defaults.
- Read and Completely Understand the Contract- It is important that the borrower knows exactly what is in contract so it isn’t unintentionally broken.
How Using Max Cash® Title Loans Could Help Eliminate Some of Those Cons
At Max Cash Title Loans, we may be able to help prevent some cons that come with the title loan process. This is because we are not a lender ourselves but are a free service that connects our customers with lenders.5 Because we work with hundreds of lenders, we may be able to connect you to a lender that offers competitive interest rates and flexibility.4 5
Whether you are looking to refinance a title loan or simply looking at one for the first time, we are here to help. To get started with a car title loan get into contact with us: via phone (855) 561-5626 or email firstname.lastname@example.org.
Like any type of loan in the financial world, title loans come with their own sets of pros and cons. Before obtaining one it is important to know and understand what these are. The good thing about the cons of title loans is that, some of them may be avoided.
At Max Cash Title Loans our services may help you obtain the most out of the title loan process. We could offer convenience by presenting the pros of title loans and minimizing the cons that may come up with each step.