A big misconception among many online title loans lenders is that a customer, when asking for a title loan, knows the concept of it. The reality is that most folks don’t know what a title loan is or what it entails. They may do a search of it online and do some comparison shopping, but they still don’t have the basic information of what a title loan is. Are you one of the thousands of people who need money and are looking at cash loans on car titles as an option? Do you want to learn more about online title loans so you can become an informed customer? If so, then you’ve come to the right place.
Title Loans: What Are They?
The best way to describe a title loan is this: It’s money given to you after you hand over some type of collateral such as a car title. A title loan lets you borrow more money than you’d get from an online payday loan lender or signature loan. The title loan lender won’t use your credit history or score to make their decision.
When you get a loan on your car title, a lender will front you up to 60% of its value. If you should fail to repay the loan, the lender has the right to repossess the vehicle to sell it to recoup his/her losses.
Online title loans are similar to other kinds of online loans. You’re using the vehicle to secure the loan you need, but with that loan comes the principal balance, the interest and fees. A majority of title loans allow you more time to pay the loan back (unlike what you see with a payday loan or short-term loan).
Lenders will work with you to develop a repayment schedule that works for both of you. There have been many cases where people take longer than necessary to repay a loan (three years, for example). Extending a loan for this long will decrease the monthly payments, but you’ll end up paying more in the long run for the interest.
You want the title loan lender you choose to work hard for you, not line his/her pocketbook. Really look at the loan’s terms before signing anything.
Potential Problems With A Title Loan
The majority of title loan companies look at your current situation – not your credit history and its problems. While they look for a bankruptcy, they tend to ignore much everything else. If you have bad credit, you can still get a title loan (as long as you have a vehicle title to use as collateral).
If you fail to repay the loan on time, it’s possible you could lose your vehicle altogether. Lenders know that most people don’t want to be without their vehicles.
You should also understand that online title loans can be expensive – most companies will charge a high-interest rate (significantly higher than traditional loans). Why is that? Lenders know when a person comes to them for money, it’s because they’ve been turned down in other areas for a loan. Online title loans are a person’s last choice for cash.
Note: People with good credit should consider staying with the normal financing options.
There are a plethora of online companies that don’t mind providing you with a title loan, but it’s imperative that you do your homework. The company you are looking at should give you some idea of what a title loan is before you fill out the application. And, even if you do, it’s always good to look at various sources to learn about this. Your wallet, your sanity and your vehicle will thank you for it.
Other Things To Keep In Mind When Applying For A Title Loan Online
Make sure to ask the lender about their fees associated with the auto title loans. Make sure they explain everything in the contract in great details. Go over it with a fine-tooth comb to ensure you’re not caught unawares. If you find fees the lender hasn’t mentioned, you may want to reconsider doing business with them. If a lender refuses to go through the contract, they may have something to hide.
Some lenders charges fees without you knowing such as fees for pulling your credit or processing your loan application. You don’t have to pay these fees if you don’t want to. Spend your time doing research on each title loan company to find one that will work for you.