01 Jun 2017   /   0 comments

Why Are Title Loans Bad?

Paul

pexels-photo-57645Do you feel like you are stuck between a rock and a hard place when it comes to your money situation? If that’s the case for you, then some extra money may be exactly what could help you get through that tough spot. Are you currently considering an auto title loan because you don’t want to have to go through the strenuous process of applying for a personal loan from a bank only to be turned down because of your credit score? If you are considering a title loan, you may have some reservations in your mind because of certain things you have heard about them and how they could be harmful to your finances. You might want to know the answer to the question of why are title loans bad? Well, we at TFC Title Loans, have been in the alternative lending industry for nearly 25 years, making us the oldest title loan lender in the state of California. With all that experience, there is no one else more qualified to answer that question than we are! Additionally, we strongly believe it is our responsibility to ensure adequate consumer education and lender transparency so as to make you clearly aware of both the advantages and disadvantages of title loans so you know you are making the right decision!

For these very reasons, we have been expanding upon our website extensively to include resource articles just like this one to answer every one of your questions regarding title loans. This resource article will address the risks and disadvantages associated with taking out a title loan and the ways in which TFC Title Loans tries their absolute best to minimize the risks for their customers. For all loan options out there, there are risks involved. However, it is true that some of the risks that go along with title loans are atypical of other lending options. You can be approved for Car Title Loans regardless of your credit score which means that the lender is taking on more risk themselves by lending to someone with a less-than-perfect credit score. Since they take on more risk, there needs to be higher interest rates on Car Title Loans.

Ever since we first started in 1994, we have assisted thousands upon thousands of customers in obtaining title loans at lower risk and competitive interest rates. If you would like to learn a little bit more about title loans before making a decision, then please continue reading!

The Disadvantages and Risks of Title Loans

  1. Higher Interest Rates: Because of the higher risk in lending to borrowers with sub-prime credit scores, title loans are always likely to have substantially higher interest rates to cover that margin. Higher interest rates are a disadvantage of title loans because you may end up need to pay back quite a bit more than you would with a typical personal loan from a bank.
  2. Potential for Repossession: Since your car is used as collateral for the loan, it is a possibility that if you were to default on your loan your vehicle could be repossessed to cover the extenuating expenses. However, repossession can be avoided by covering your payments once you’ve been notified of the default.
  3. Shorter Pay Off Schedule: There are many Car Title Loans that have very short pay back times of only a few months and some as little as thirty days. This can make the monthly payments unaffordable!
  4. Random and Unexpected Fees: Making your payments late can cause fees to build up over time costing you even more money. There are some lender who even charge you prepayment penalties so that you can never avoid interest even if you are capable of paying back early.

How TFC Minimizes Both of Those Risks

  1. Long Loan Terms: Our loan terms are far longer than our competitors. We give our customers between 24 and 36 months to finish paying off their loans, enabling their loans to be far more affordable.
  2. Sliding Interest Scales: TFC has a special product which can lower interest rates for our customers by tailoring the rates of each loan so that they are unique to each customer.
  3. Excellent Customer Service: If you can’t make payments, then simply give us a call and we can figure out a way to help you through the process. All we want is to see you succeed!
  4. No Prepayment Penalties: TFC Title Loans does not charge any prepayment penalties on our title loans so you can feel free to pay down your loan as soon as you would like to avoid any extra interest!

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