An auto title loan is something many people do not understand, though it’s actually one of the most comprehensible financial products on the market. It is a very easy type of lending that does not punish individuals for having a bad credit score and, in most cases, the lender of such loans do not even check credit scores or history.
An auto title loan will require that the borrower make their car physically available for inspection. While many of the companies that provide this type of lending service do operate online, there is a necessary real-life component to securing one of these loans.
Happily, the vast majority of paperwork can be handled over the Internet which frees up time and makes the entire process much easier than it has been in the past; no waiting in line, no filling out paperwork in an office and possibly finding out one needs to make a trip home to obtain a missing but necessary document.
A title auto loan is an excellent product when a person finds themselves in a tight financial situation that requires more money that what a payday loan can give.
These loans are just as fast as payday loans but the collateral means that the borrower is taking a loan against a physical possession rather than simply against the amount of income the lender can reasonably expect that borrower to receive by the time the loan comes due.
For large bills that come along unexpectedly, they are useful and convenient products, in this regard. There are numerous sites online that can explain the exact regulations regarding how an auto title loan may be awarded in specific states.
Remember that this varies from state to state and will most certainly affect the amount of funding that can be received versus the value of one’s automobile and versus the expected income one can verify to the lender. An auto loan is one of the easiest loans to deal with, if you use good judgment.
Let’s first differentiate an auto title loan from an ordinary auto loan. An auto loan is just that-a loan for an automobile.
An auto title loan involves you putting up an automobile you own as collateral. This will help your loan application and usually results in approval, regardless of credit problems. When the company sees a no-lose scenario (in this instance they can resell your vehicle and recover the loss) they are more inclined to take a chance on you.
Now it doesn’t take much insight to be able to see the potential for danger in a title auto loan. If you fail to repay the loan, you could lose your car.
However, this scenario doesn’t have to be your future. For one thing, know that if you are unable to pay the debt in full, this doesn’t necessarily mean that the contract is broken and that you lose your car.
Instead, you may have a “rollback”, meaning that you start paying the full balance bit by bit, and pay increasing interest along with it. The interest may not be appealing to you, but at least you did not lose your car!
You know you’re going to get paid next week, so it’s no question that you will have the money in a short period of time. Therefore, there’s really no harm in taking out a short-term loan such as a car title loan.
However, if you have a major expense to cover, and no idea where the repayment is going to come from, then it’s best to look for another solution. Title auto loans are best used for short-term emergencies, instances where the borrower can pay the money back in a matter of days or weeks.
When you do this, it saves on interest and doesn’t put your car at risk. All that is required from you is some homework; calculate the expenses and the estimated time of repayment and you will be surprised by the amount of money you save.
Jack R. Landry has a PHD in financial services and has written hundreds of articles relating to consumer services and payday advances. He has been a consumer advocate for
nearly 25 years.
Jack R. Landry