In today’s world, it has become harder and harder for people to make ends meet. Whether it’s trying to pay this month’s electric bill, having enough money to buy groceries, or having an unexpected car repair that needs to get done right away, all it takes is one of these situations to turn a small financial problem into a major crisis. While some people may be able to get a small loan from family or friends or simply charge it to their credit card, other people may not be so lucky. If they have bad credit and are unable to obtain the needed funds through traditional methods, they may turn to title loans as a quick and easy way to get fast cash. However, before turning over their car title for those funds, there are three important things they should keep in mind.
1- An Average APR of 300%
For most loans that people obtain, they often think little of the APR, better known as the Annual Percentage Rate. However, if you have a title loan, you need to give the APR much consideration, since it often averages more than 300 percent. And unfortunately, the APR often comes back to haunt those who take out title loans. Since the duration of a title loan is supposed to be only one month, that breaks down to a monthly interest rate of 25 percent, which is difficult for many borrowers to afford. Because of this, instead of paying off the title loan at the end of the month, they simply roll it over for another 30 days, with the fees and interest continuing to increase. If they continue to do so month after month, what was supposed to be a short-term loan has turned into a never-ending loan, and the 300 percent APR becomes a reality. For more information about this, visit here.
2- Much Quicker Approval
Unlike traditional loans that can take days or even weeks to get approved, title loans have the advantage of much quicker approval. In most cases, a person can be approved for a title loan in no more than 30 minutes, so long as they have a clear car title with them. This can be extremely advantageous when the money is needed for an emergency situation, such as a medical bill or home repair. Even though the interest rates may be much higher than traditional loans, those in need of quick money often believe the advantages of having money in hand within a few minutes outweigh any possible disadvantages that may lie ahead later on. And in addition to all this, those seeking a title loan like the fact that they can get a loan for as little as $100 if needed, since no bank or other lender would offer loans so small.
3- Repossession of Vehicle
While the last thing a title loan lender wants to deal with is repossessing a vehicle, someone who’s dealing with extremely high interest rates may not be worried about the thought of having their vehicle repossessed. However, when they weigh the pros and cons of having money in their hand within a few minutes versus not being able to pay a doctor’s bill or buy something to eat, they worry little about the terms of the loan. However, studies of these loans have shown that more than 20 percent of people who take out title loans eventually wind up having their vehicle repossessed due to failure to repay the loan. However, the good news is that although the lender can repossess the vehicle, they usually try everything possible to give the borrower enough time to repay the loan, since repossessing the vehicle takes time and money on their part. More information about this can be found here.
By remembering these three important facts regarding title loans, borrowers may choose to think twice about handing over their car title to get what feels like easy money. However, due to the ease of which these loans can be had, chances are most people will choose to go through with the loan. For those who do, ensure that the loan can be paid back as soon as possible.
