Car title loans are often misunderstood. They are frequently confused with payday loans, but the two are very different. While both are typically short-term loans of relatively small sums of money, title loans are generally easy to apply for if you can meet the conditions.
The conditions of a title loan involve placing a lien on your vehicle and surrendering the primary copy of your title. This is used as collateral in case you are unable to pay back the loan. Typically, the only other requirement for the loan is verification of your employment, and no credit report is consulted.
Using a title loan properly means being prepared to pay it back on time, much like a payday loan. Interest rates are typically much higher on a title loan, and it’s easy to find it turning much more costly than it needs to be if you aren’t prompt in paying it down.
While title loans are easy to get, and can typically be achieved in a matter of minutes, the practical risk of putting your vehicle forward as collateral can be dangerous. If the employment you tend to pay the loan off with requires the use of your vehicle, it may not be a good decision to take out a title loan. However, if you are responsible and prepared to pay off the loan as quickly as possible, a title loan can be a valuable financial tool that can see you through a tight spot. As with any financial decision, do your research and be responsible.
Also see – Auto loan rates set to come down next-year