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.
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.
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.
Disadvantages of Title Loan
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.
Legal in the Limited States
A title loan is only legal in 30 states in the United States. If you live in a state that does not authorize the administration of these loans within its borders, you will have to travel to another state to secure a loan. Another option is to apply for a title loan online.
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.
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