If you are in a financial emergency where you need funding and fast, then you may be considering getting an auto title loan.
But perhaps you are hesitating because you have heard people say they can have certain pitfalls. So, you might be wondering how bad are title loans really.
Getting a Title Loan From a Reputable Auto Lender
At TFC Title Loans, we can give you all the details about the advantages and disadvantages of Car Title Loans. We have been in the alternative lending industry for nearly 25 years!
Itt’s our responsibility to share all of the knowledge we have gained from that experience with our customers.
We do this because we are strong believers in consumer education and lender transparency. Recently we have been working hard to expand our website to include various resource pages that answer questions and address concerns about Car Title Loans.
This particular resource article will be address the risks and disadvantages of title loans and how we, at TFC, try our best to minimize those risks and maximize the advantages.
All lending options have risks that go along with them. No matter how traditional the loan, there will always be risks associated with them. Of course, there are some other risks that go along with title loans that are atypical of other lending options. This is because title loans are secured loans rather than unsecured loans, meaning that your approval is based on the collateral trade-in value in your vehicle rather than your credit score.
You can be approved for Car Title Loans regardless of your credit score but that means the lender will be taking on more risk by lending to individuals with sub-prime credit scores. Since the risk is higher there will be higher interest rates on the loans.
We have helped thousands of customers through their financial worries by providing Car Title Loans at amazingly competitive rates. We have locations all across the states of California, Texas, Arizona, and New Mexico. If you would like to learn more about title loans, then keep reading.
How Bad Are Title Loans? The Risks
- High Interest Rates: Since there is a higher risk for lending to borrowers with a lower credit score, title loans always have higher interest rates to cover that risk. A higher interest rate means that you would end up needing to pay more back than you would need to with other more traditional loans.
- Repossession Is Possible: Your car is used as collateral for Car Title Loans which means that if you were to miss payments and default on the loan, repossession is a possibility. Repossession can be avoided if you catch up with your payments or pay off the full balance of the loan.
- Short Loan Terms: Many Car Title Loans have shorter loan terms so that you have to pay off your title loan in only a few months and sometimes as little as thirty days. This can make it incredibly difficult to pay off your loan on time.
- Unexpected Fees: Late payments can mean fees which build up over time increasing the total amount you will need to pay back. Some lenders even charge prepayment penalties so the borrower has absolutely no chance to minimize their interest acquirement by paying off the loan early.
How TFC Minimizes the Risks
- Longer Loan Terms: We tailor each of our customers’ loan terms and payment schedules with longer timelines of 24 to 36 months. Why? This makes the payments exceedingly more affordable.
- No Prepayment Penalties: At TFC Title Loans, we charge absolutely no prepayment penalties whatsoever. This is so you can feel free to pay off your loan as early as you like! You’ll then avoid the acquirement of interest.
- Sliding Interest Scale: TFC Title Loans have a title loan product which can minimize the likelihood of higher interest rates. This is called a sliding interest scale. It tailors each loans rate to the client’s unique circumstances.
- Excellent Customer Service: Worried about defaulting or missing payments? All you need to do is give us a call! We can help work out a way in paying off your loan. Our goal is your success and to help you understand, how bad are title loans really? Not so bad, as they can truly help you all around financially when you’ve encountered stress.