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Car title loans can be a great option when used wisely and are a great form of credit, utilising an asset you have for your own financial benefit.
When you Google “title loan Ft Lauderdale”, it is essentially that you know the sort of loan you are utilising for credit. If you use a car title loan, you should never look at it as any sort of fix for a long-term problem.
It can sometimes be difficult to find the cash that you need for unexpected expenses, especially if you are someone who has to live from one pay check to the next. It can be worse at times if you find yourself in a situation without a pay check or if you are dealing with poor credit history. If for some reason you are not able to borrow from a credit union, loan, company, or another traditional lender, you may find that a car title loan is a quick answer to get you the cash that you need. In some cases, a title loan company may offer up to $50,000 in a matter of minutes after the loan application is complete. Some applicants may not even have to go through a credit check. While this may seem like a great idea, it is not always the best option.
Car title loans should only be looked at as a last-ditch effort when there are no other options present
What are Car Title Loans?
These loans are offered by title loan agencies that will lend cash after you sign on with a promise that you repay the loan by putting your vehicle up as collateral. This is known as a secured loan in the financing world because you have something that backs your promise to repay. If you fail to repay according to the terms of the loan agreement, the lending institution has the ability to take your vehicle to satisfy whatever balance is owed.
Who Can Qualify?
Anyone who owns a car that is worth more than whatever the oustanding loan balance is can get a title loan for their vehicle. The difference that is between what the vehicle is worth and what you owe is the equity. Title loan agencies will lend a portion of the equity in cash. In most cases, the only other qualifying factor will be showing proof that you have insurance on the vehicle. After the lender agrees to the loan and you sign on, they essentially own your vehicle until the balance that you owe is paid in full. You may also have to increase your auto insurance coverage during the loan.
Benefits – The main benefit will be instant cash and that your credit history does not matter. If you are unable to get funds elsewhere, this makes title loans a very attractive option.
Disadvantages – Losing your vehicle is the major pitfall from a title loan. Most of these loans have short terms of 30 or 60 days, but some will extend it longer if necessary. However, there will usually be a hefty interest rate that is tied in with the loan and there could be charges for an extension that goes above and beyond original agreements.
The last thing that anyone wants to do is lose their vehicle and nobody wants to fall into a trap with excessive interest rates. However, this is just the nature of the title loan. You may have an initial interest rate that is between 15 to 20% but this could increase if you need an extension or if you have an issue making one of the payments. It is also not unheard of that a borrower will have to pay anywhere from two to three times the amount of the original loan before all of the balance (including interest) is paid in full.
If you need cash quickly and you are out of options, using a car title loan will get you the funds that you need. It is just important that you always weigh the benefits and disadvantages so that you can go into the agreement with a clear picture of what could happen.