Most people have negative views of car title loans. They know that anyone who takes out a loan on their vehicle will have high interest rates. They also think these loans are predatory and the loan will never get off. Online title loan companies have been in the news for all sorts of different reasons. These issues range from huge fees to repossessing vehicles from people that fell behind. Most of us have a negative view of auto equity lenders and some of these concerns are understandable. Did you know that many of the largest lenders that offer online title loans follow regulations set by the state they do business in? There’s also the fact that online title loans can be appropriate for financial emergencies. In situations like this, we’ve seen borrowers actually save money versus the consequences of what happens if they do nothing. For example, what if an applicant only took out a title loan because they had no other option? They tried to get a bank loan or get financing from a lending institution. Instead they got turned down because of bad credit or no recent employment history. Other options include borrowing money from a friend or finding money in other ways. Both of these options don’t always work out. The alternative of not having money at all to pay for something critical is a stark difference versus taking out an online title loan and paying it back on time.
Car title loan companies will take early early payments
Interest rates and online lender terms from car title loan companies will fluctuate on day by day basis. While many types of loans have different terms, we can safely assume that short term financing will have a higher daily APR versus more traditional lending options. Most lenders will have similar rates and finance charges that are set or capped by the state they operate in. These rates tend to be higher than typical online loans. As an example, someone with a bad to average credit score will get a loan with rates that approach 30%. Most payday loans or cash advance financing options will see a borrower get rates that are well over 100%. Online title loans operate the same as cash advances. The goal with this type of financing is to pay off the principle balance in the quickest amount of time possible. The finance charges on a short term loan will be huge compared to a typical bank loan. With most traditional loan options the payoff time occurs over a matter of years. The amount of interest would be astronomical if this occurred with online title loans. That’s why you can’t look at these two types of financing in the same way. They’re different and constructed for opposite consumers that are on other ends of the borrowing spectrum. We know there’s little to no chance that an applicant with a credit reporting score of 550 is going to qualify for a bank loan. Applying with a few car title loan companies is going to be their last option and will likely be their only way of getting quick cash.
Learn how to save money with an online title loan
Let’s get into how getting an online title loan can actually save a borrower money. In this scenario the borrower is not eligible for other types of financing. Their credit report score is to low to qualify for bank or installment loans. The applicant is not able to get money from friends or relatives and they have nowhere to turn. They are dealing with a broken pipe in their house and need $3,000 to fix the problem. Each day that goes by is costing them $500 as the leak is getting worse. This is the exact scenario where online title loans come into play. The finance charges are expensive and the borrower also has the risk of losing the vehicle. On the flip side, the consumer is able to get cash for their vehicle to pay for repairs. The important thing to understand here is that the borrower needs to quickly pay back the car title loan company. Like other short term financing options, car title loans get more expensive as each day goes by. There’s no prepayment penalty and that’s why a borrower can save money in the long run by working with a company that funds online title loans!