Advantages and Disadvantages of Title Loans

As millions of Americans struggle to make sense of this new economic climate, there has been a great deal of discussion in the media about lending solutions. Some of the most highly-debated financial instruments are title loans.

Quite frankly, these loans have received mixed reviews from the press and consumers. Regular media reports portray these loans in a negative light. However, many title loan customers believe that these loans have saved them from financial ruin.

With all of these mixed messages circulating through media outlets, it’s hard to know what to believe about these loans. If you want to learn more about these loans, this article can provide you with the advantages and disadvantages of a title loan.

Advantages of Title Loan

Easy to Qualify

It is easy to qualify for a title loan. There is no involvement of credit checks in the title loan application process. Other title loan requirements include having a free and clear vehicle title, regular monthly income, and state-issued identification.

Online Application

You can apply for your title loan online, that’s right. There are hundreds of national online lenders that provide this convenient service. You do not have to go to a physical location to finalize your loan process in many instances. Your title loan needs can be handled from your computer and cell phone.

Approved on Application Date

You can be approved for a title loan on the same day you apply for the loan. If you cannot wait a week or more for approval from traditional lenders, this type of loan will benefit you.

Cash Deposit

Your title loan cash will be deposited into your bank account. Direct deposits make it easier and faster for you to meet your emergency financial needs.

No Borrowing Limitation

You can borrow as much or as little money as you need. The value of your car determines the amount of money you can borrow from a title lender. If your car is valued at $9,500, you may be eligible to borrow any amount of money that does not exceed that amount.

Advantages and Disadvantages of Title Loans

Disadvantages of Title Loan

Security Safety

You are using your car as security for the loan. Title lenders can legally repossess your car if you miss your car payment.

Higher Interest Rate

A title loan has higher interest rates than traditional loans such as car loans, mortgages, and personal loans. The intention of a title loan is to be a short-term financial solution. You can lower the amount of interest that you pay by repaying the loan early.

No other Loan on the same Security

Title lenders place a lien on your vehicle’s title. This lien is recorded at your state’s motor vehicle administration. You will not be able to get another loan for your car until you repay the loan.

Additional Fee and Interest on Late Payment

Paying your loan late can result in additional fees and additional interest. The balance on your loan increases when you pay your installments late. As a result, your loan can become less affordable for you.

Before you get a title loan from an online title lender, it is important for you to know the benefits and consequences of securing these loans. However, if you manage your title loan correctly, you can have a positive title loan experience.



Sanjay Borad

Sanjay Bulaki Borad

Sanjay Borad is the founder & CEO of eFinanceManagement. He is passionate about keeping and making things simple and easy. Running this blog since 2009 and trying to explain "Financial Management Concepts in Layman's Terms".

5 thoughts on “Advantages and Disadvantages of Title Loans”

  1. A good article on the pros and cons of title loans. There’s new legislation coming out that will force title loan lenders to make sure their customers can repay these loans in a short period of time. That should help curtail some of the negativity surrounding title loans. Again, great article!

    Reply
  2. I did not know the fact that there are no credit checks involved with the title loan application process. My cousin is going through a very rough economic situation so it might be a good option to check title loans. Thanks for the information about how you can get approved within the same day you apply.

    Reply
  3. My husband and I want to buy a new car, so I wanted some tips and advice on getting a loan. I didn’t know you could get a title loan online with the vast amount of lenders there are. I’ll have to keep that in mind to find the right company that’ll give a good rate to two college students, thanks for this post!

    Reply

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