There has been an increase in the number of borrowers who are using their cars as collateral with auto title loans, this is similar to a payday loan but with sometimes better terms as the vehicle has a lien placed upon it. What a borrow does when they take out a title loan is they must allow a particular lender to place a lien on the car’s title. The lien will be in the amount of the loan, plus any applicable interest that is set out in the line of credit.
Title loans do not typically require the borrowers credit score because they are secured with the collateral of the vehicle. Title loans can be seen as risky if you do not have a good payment history, but for those who pay on time and need cash quick they can be seen as an alternative to a bank to access funds quickly.
One of the great perks of the auto title loans is that you can have the cash within an hour, sometimes as short as 15 minutes. Generally, they are lending for less than the value of the vehicle, so if your vehicle is older and a late model, it may be difficult to obtain an auto title loan due to the vehicle value.
An auto title loan does not typically do an exhaustive check of your sources of income and debts, because the transaction only values the worth and the condition of the vehicle.
Some of the disadvantages of the auto title loans are that they can have sometimes very high interest rates, which are higher than you could see on a comparable credit card. The loans are typically very short, similar to payday loans so that you can have access to the money before you would typically be paid.
It is imperative that you pay your loan on time or your vehicle could be in jeopardy and a whole lot of other problems if you were to lose your vehicle.
As with any type of financial instrument, make sure you read the fine print and that you understand what you are signing. Make sure you know the APR and not just the monthly premium that you will be paying. There are sometimes other fees that add to the amount of the loan. Through education you will find an acceptable loan so that you can get the cash you need quickly!