We can all get into the situation
that we need to get money for an emergency or otherwise urgent situation and we
have no one to help us, yet we don’t want to go to a pawn shop because they pay
the least of the amounts and have tons of conditions. If someone has no other way, then they can
freely visit a company which offers registration or a title loan. Both are for
shorter term and both are specialized on giving loan based on the fact that
someone has a car. But there are many things to consider before obtaining a
title loan, and we collected a few points to tell you exactly why.
1.)
Super high interest rates
A title loan is very similar to a
pawn loan. And as such it’s created for those who have no other way to get to
cash. And as such and as we all know about pawn stores, they abuse the
situation and some abuse it hard. Interest rates of title loans can be as high
as 200%. And this is no joke. Not to mention the other conditions some loan
companies have. This means the following
precautions:
- Think
hard and only opt for this loan if you really have no other choice and you
really need the money for a very good reason.
- Opt
for a sum as low as possible. The interest rates can make this loan look
like an obvious robbery.
- Title
loan is banned in several states for a reason. It’s because it can clearly
abuse the client’s situation.
- It
you really need the loan, opt for a payback in the shortest time possible
and even if you do a longer period plan, do not wait it out but opt for a
quicker payback ( if there is no prepayment penalty) . You will only win
on this by not having to pay so much interest at the end of the day.
2.)
A title loan uses your car as a lien
This means, that similarly to a
car pawn a title loan will use your car as a lien, that’s exactly why they need
you to fully own your car, so should anything go wrong, they will repossess
your car for the loan you failed to pay back.
3.)
This is a short term loan by nature
This means that this loan should be
paid back in the matter of weeks. Always look for a company which doesn’t use
prepayment penalty, so you have the chance to pay the full amount back in a
shorter period of time.
4.) If
your vehicle is a salvaged vehicle you will face special conditions
Not many people know about this,
but many title loan companies don’t even deal with salvaged vehicles and even
if they do, they automatically count only the 50% of the original value of the
vehicle.
5.) The
date of the contract and the date of you getting the money must be the same
or you will need to prepare and
sign a new contract.
