Loans are a great way to help finance specific expenses, but most of them have strict requirements and greatly considers credit scores. This can make it difficult for a borrower if their records are insufficient. But, the good news is there are other secured loan options available, especially in times of need. Sourcing finances may be complex and difficult, but there are institutions that are willing to help people with their financial problems.
What is a Title Loan
Title lending or title loan is a type of secured loan where a person can borrow money and use their car to pay the money back as collateral. This is typically used if a person has a low credit score which does not meet the requirement for other types of loans.
Borrowers can use and keep the car when they get the title loan. If payment has not been made for the loan, however, the car can be repossessed by the lenders. Title loans are short-term and may range between three months to three years, depending on the agreement. Payments for the loan are preferred in cash, but for convenience, there are credit card processing for title lenders too.
Financial institutions like banks and credit unions do not offer title loans. It is only available from alternative lenders. Depending on the lender, other types of vehicles can be used such as motorcycles, boats, recreational vehicles, trailers, and heavy-duty equipment.
What to Expect When Getting a Title Loan
Title loans vary from lender to lender. If the car is on a mortgage or if you owe money on your car, then a lender might reject your loan. Lenders use the value of the car to determine the interest you’ll pay. It also determines the terms for repayment and the amount of money that can be lent.
Borrowers should consider and carefully think things through before getting a title loan. They should not borrow more money than they need. Borrowers should be conscious of spending and saving as part of the plan to pay the loan back. Budgets can help with the management of money, but never stretch a budget to its limit.
Before signing anything, read the details of the contract carefully. Ask the lender if you can have a copy of the agreement to review it further at home. Ask questions to clarify things you don’t understand.
Documents or contracts regarding your loan should be provided by the lender with the following information: the total cost of the loan, along with the details of the borrowed amount, the amount of interest to pay, and other fees. The contract should also state the timing and the amount of payment and the annual percentage rate. It should state the options for payment before the due date of the loan, either in partial or full, without paying additional fees. It should have proper documentation and description of the car.
Financial difficulties are hard to deal with, but lenders and financial institutions give us options and help us ease these problems. We just have to be sure and be responsible and do our part to repay loans, so that we won’t have any problems in the future.