Benefits of car title loans
If you are employed, maybe you are on a day job, at a specific date that is far away from your payday, the financial struggles in your life are at their best at this time.
By saying so, it means that if you meet with an emergency, it becomes a pain to try and solve it.
Emergencies could range from repayments of mortgage loans, and school fees for your kids to unexpected situations like illness and accidents.
All these require money to settle. It’s never that easy to cope, especially if the only source of income you have is what you get at the end of the month.
Vehicle title loans have emerged as a great alternative to help you get out of tricky financial situations. It’s all about getting yourself a lifeline before you receive your salary by the month-end payday.
According to statistics, car title loans are becoming popular among people these days.
A vehicle title loan requires you to use your car as collateral. Loan amounts can range from between $150- $1500 but it could be as high as $5000.
The loan amount is determined by the value of the vehicle being used for collateral. The loan amount is about 45% of the car’s market worth at the time of loan application.
You can approach the lending company either by physically making your way to the office or applying online. After the application is submitted, you should submit your car title and photo identification.
The company also asks for another set of keys for the vehicle and will also ask you to get a roadside plan.
After processing your loan, the company gives you the loan amount in the form of a check or deposits the money into your deposit account.
The company expects you to pay back the money as stipulated by the contract that you sign upon getting the loan. It includes the interest and other fees. If you cannot repay the loan, the company may end up repossessing your car and selling it to recover the outstanding loan.
A car title loan, however, has many advantages. That is why it is very popular among people.
1. Ability to provide cash
A car title loan is designed to help you in times of financial difficulties. It offers cash conveniently and quickly just when you need it.
The loan helps you get out of financially difficult situations by providing cash to solve the problem at hand. We are talking about solving all the emergencies that may happen at a time when your next payday is still a few weeks away.
2. Getting your money fast
The application and approval of a car title loan take a very short time. In fact, you could be getting your loan in a matter of a day or two. Compared to other types of loans, this is quite fast. It does not require you to keep making applications and waiting in line at the banks.
After you are approved for a car title loan, your car is then inspected and its value is determined. The lender and you will discuss before the former lays down the terms and conditions for a vehicle title loan.
The speed of the car title loan processing and approval is a result of the simplicity of the loan and how it is designed.
3. Minimal requirements
For your loan to be processed, you will need to actually own a car. There are no bank accounts or credit checks. The car which you will be using as collateral for the car title loan is what matters.
Therefore, it is easy to process the loan and get the money that you need in less than two days. The credentials needed include basic personal information, the car title, the car itself during the application for assessing its value, and its photo identification. Within a day or two, the loan is processed and you are on your way to solving your emergency.
Other loans require a lot of credentials and background checks before they approve the loan. This takes a lot of time. This is why most people are turning to car title loans for quick cash solutions.
4. Use the car as usual
A car title loan is very different from going to the pawnshop. This is because it allows you to continue using the car which you had used as collateral as you normally do.
The only thing the car title lending company needs is the car title. You are required to do is keep making prompt payments for the car title loan to avoid repossession of the vehicle.
If you go to pawnshops, they will require the car or automobile to be left in their care until the loan has been repaid in full. It is only then that you will get your car back.
5. Credit scores
As stated earlier, the only documents and credentials needed are just your personal details, the car title, and the car and its photo identifications. It is important to understand that a car title loan uses the car as collateral.
Essentially the car is the loan’s source of security. For this reason, the lenders barely look at the credit score of the borrower. The only thing they need is the car title.
Looking at traditional loans and other types of loans, the credit scores of the borrower are very important for the loan to be approved. Hence, car title loans are very suitable for most people as long as they own a car.
6. Cheaper than cash advances
Car title loans are way cheaper than cash advances. The annual percentage rate (the real cost of borrowing) of cash advances is at about 400% or 450% compared to the 300% annual percentage rate of car title loans.
While interest rates for both types of loans are quite high, interest rates for car title loans are definitely lower than those of cash advances.
As a borrower, you want a loan with a low-interest rate. Hence, most people are attracted to car title loans.
7. Convenient repayment options
Car title loans offer a variety of loan repayment options. They include physical over-the-counter payment and online payment, among others.
Compared to other types of loan servicing, this is flexible and efficient. You can make payment from anywhere at any time of your choice. This makes a car title loan very attractive.
8. No stress
A car title loans relieve you from financial stress. Emergencies are easily solved since the loan is approved. Moreover, you don’t need to stress about your credit score.