There are times when an individual has quick cash needs that cannot wait for a lengthy loan processing time. For these quick cash needs, there’s one alternative that you can consider: title loans online. These loans are not exactly inexpensive. This is why it would be wise for borrowers to find out everything they can about this type of loan before applying for one. When you understand exactly what it is you are getting yourself into, you will be able to prepare for the financial obligation properly and avoid unnecessary pitfalls.
What are Title Loans
Title loans are small loans extended by financial institutions to individuals who are willing to offer their car as collateral to secure their loan. The car itself is not physically turned over to the lender. What happens is that a lien is placed on the car so that the lender can reposses it in case the borrower fails to repay his loan. When the borrower completes his repayments, the lien is lifted and the possession of the car reverts to him.
These loans usually have shorter repayment periods yet higher interest rates. While the APRs run up to over 100%, lenders argue that borrowers actually pay lower charges as the loans do not normally extend beyond a couple of months. The usual term for title loans, in fact, is a month. As the interest rates are quite high, this type of loan is availed of by those who are not eligible for regular personal loans offered by conventional banks.
When Title Loans are Beneficial
Title loans are best for individuals with emergency cash needs as these loans can be granted within a matter of hours or even minutes. Since there are no credit checks, anyone with problematic credit scores can also benefit from title loans online. There are also no financial documents required by the lenders as the amount of the loan will be based on the value of the car being offered as collateral.
People with cash needs that can be covered by the value of their car can apply for this type of loan. Title loans are particularly advantageous for individuals whose cars are still in good condition. This will allow them to borrow more money. The benefit of having quick cash, however, should be balanced by the ability to repay the loan. The loan will not be beneficial to the borrower at all if he is unable to meet his repayment obligations. There are some unfortunate borrowers who had to let go of their cars because of their failure to repay their title loans.
As the interest rates are high, title loans are only beneficial for those who can pay their obligation in full within a short period of time. It is not advisable to let this kind of loan drag on since it can accumulate interest charges quickly. It is important, therefore, for borrowers to ensure that their financial need is indeed an emergency and that they have adequate cash flow coming in to allow them to repay the loan right away.
Applying for Title Loans
Today, there are title loans online that people in need of quick cash can avail of. Borrowers can go online to look for trustworthy title loans providers who can give them the best loan terms. These websites usually have customer service facilities that will allow you to ask all the questions you need to ask. It is important to note too that there are some states that do not allow financial institutions to offer title loans. Be sure that you only deal with financial institutions that are authorized and legally allowed to provide such consumer finance products.
When applying for title loans online, make sure that you are not compromising your own financial standing. Even with the current debates and legislation on title loans, a lot of borrowers have been able to effectively address their emergency cash needs with these loans. Remember that availing of title loans, just like other loans, require careful analysis, financial discipline, and prompt repayment.