Most people have negative views of car title loans providers and the loans themselves. 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 companies have been in the news for all sorts of different reasons. These problems include huge fees from repossessed vehicles where the borrower fell behind on payments. Most of us have a negative view of auto equity lenders and some of these concerns are understandable. Did you know many of the largest lenders that offer instant financing follow regulations set by the state they do business in? There’s also the fact that short term funding works for some 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 an online title loan because they had no other option? They may have tried to get a bank loan or 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 and aren’t practical. Consider the alternative of not having money to pay for a financial emergency. Most applicants will consider taking out an online title loan and paying it back on time.
Most car title loan companies will allow early payments
Interest rates and payoff terms from car title loan companies will fluctuate on a daily basis. Many types of loans have different terms and finance rates. We can assume that short term financing will have a higher daily APR versus traditional lending options. Most lenders will have similar rates and finance charges capped by the state they work in. These rates are 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 work the same way as cash advances or installment loans. The goal with this type of financing is to pay off the principal balance in the quickest amount of time possible. The finance charges on a vehicle title loan will be huge compared to a typical bank loan. With most traditional borrowing options the payoff time occurs over a matter of years. The amount of interest would be astronomical if this occurred with title loans online. 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 it’s unlikely a borrower with a FICO score of 550 will qualify for a bank loan. Applying with a few companies near you should be a last resort. For someone with bad credit it may be the only way to get instant cash.
Learn how to save money with an online equity lender
Let’s discuss how using a pink slip as collateral can save a borrower money. In this scenario the borrower is not eligible for other types of financing. Their credit report score will not qualify for bank or installment loans. The applicant can’t 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 it may make sense to use a vehicle as collateral for a loan. The finance charges with most title loan companies are expensive and a borrower can run 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 a borrower needs to pay back the vehicle financing company. Like other short term financing options, car title loans get more expensive as each day goes by. If you do an interest calculation and check the daily APR you can see the amount due adds up fast! There’s no prepayment penalty and a borrower can save money by working with a company that funds car title loans!