Have you been wondering what the advantages and disadvantages of title loans are? You may have been thinking about this more often lately because these loans in which the lender uses your vehicle as collateral are becoming increasingly popular. They are one of the fastest and most effective ways to get money quickly. However, just like any other loan they still have their own disadvantages. In this article, we take a look at the advantages and disadvantages of title loans in detail.
One of the biggest advantages of Car Title Loans is that the application, approval process, and money delivery is extraordinarily fast and easy compared to obtaining a personal loan from the bank.
Overall, the whole process can be so quick that is doesn’t last longer than 48 hours. This is possible because, unlike other types of loans, the market value of the collateral offered always exceeds the amount of the loan being processed.
To process your loan, we only require your personal information (name, address, identification) and the documentation of your vehicle (title, insurance, registration).
Anyone who owns a car or motorcycle can apply for a title loan. Title loan lenders don’t put as much weight on your credit score as banks do since they can determine your eligibility on numerous qualifying factors including the value of your vehicle that you are using for collateral.
Therefore, people with a negative credit history that may not have access to traditional loans have an opportunity to get the money they need with title loans. TFC Title Loans can be the financial institution that makes life easier for you.
Car Title Loans are ideal for individuals who are going through a tough financial situation and don’t have the credit score to access other lending options. If you can’t get the money you need to take care of your emergency from the bank, then you can get it by using your car as collateral.
Another great advantage of Car Title Loans is that, even though your car operates as the collateral for the loan, you will still be able to continue driving it as you usually would.
Imagine if you were forced to sell your car in order to pay off a debt or cover an emergency situation. The problem is that, once you’ve covered the expense, you are still left with no money and no means of transportation. With a title loan, you get the money you need, you cover your expense, you can pay back the loan month by month, and you still have your car.
Many title loans have a more limited repayment period than personal loans offered by banks. Sometimes lenders have six-month repayment terms. However, TFC Title Loans customizes your loan to fit your individual needs. We have longer repayment periods with more affordable monthly payments.
Even with that limitation, these loans are still idea for those situations where you need to pay off an expense immediately. A title loan can meet your needs more quickly than other options would be able to.
Everything has a price. While these loans are still accessible to those with less-than-perfect credit scores, the price can come in the form of interest rates that are higher than market values.
Additionally, the interest can be incrementally increased depending on the number of months the payments are deferred. However, this disadvantage can be controlled if you chose to pay off the loan early. If you make several prepayments, you can avoid the accruement of interest.
The maximum amount of the loan is limited by the value of your car. So, if your car doesn’t have a very high current market value than you will not get a very high loan amount. Since the vehicle is the only guarantee that you will repay the loan it is impossible for them to lend you more than the value of your vehicle. Make sure that your car equals, or exceeds, the total value of the loan amount plus interest.
Don’t forget that your vehicle is acting as your collateral so if you default on the loan, your car may need to be repossessed to settle your debt. Make sure that you pay off the loan month by month and make prepayments whenever you can so you don’t feel as stressed.
If you’re concerned about these disadvantages versus the disadvantages, learn if a car title loan is really worth it.