With or without a plan, a surprise expense may come up. If you do not have enough savings, you will have to find an alternative source of cash. If you find yourself in such a situation, you may opt for loan financing. One of the easiest ways to get money is through an auto title loan.
Pros of Auto Title Loans
The primary benefit of securing an auto title loan is the speed of processing. Typically, the application process for a title loan is fast due to few requirements. In most cases, the lender only verifies the car ownership. Then, the lender caps the loan amount at about 50% of the car value. Ordinarily, this process takes 24 hours, allowing you to access cash promptly. In comparison, banks loans may take up to one month to process.
Auto title loans have few qualifications. Broadly, the lenders provide financing based on the car collateral. Thus, you can qualify for a title loan as long as you own a functioning car. In contrast, bank lenders require a credit score. Therefore, one may not be eligible for a loan if one has a low credit score. In addition, financial institutions require proof of payment, such as a steady income. You can avoid such qualification procedures by getting an auto title loan.
An auto title loan is a multi-use product. Typically, there is no restriction as to how you should use the title loan. As such, you can use the loan to finance many needs, including paying bills, attaining business liquidity, or making an investment. In comparison, other loans products may be tied up to a specific use. Thus, an auto title loan enhances your freedom of choice.
There is a misconception that getting an auto title loan involves handing over your car. On the contrary, you get to keep your vehicle while you are paying the loan. However, one hands over the car title to the lender, who hands it back upon clearing the loan. Thus, you will get to keep and use the car while enjoying the benefits of the loan.
Cons of Auto Title Loans
High Interest Rates and Fees
The main disadvantage of an auto title loan is high interest rates. Broadly, the loan interest serves as the cost of borrowing. Thus, if you plan to apply for an auto title loan, be prepared to pay interest rates.
Risk of Losing the Car
There is the risk of losing your car if you are unable to repay the loan. Typically, auto title lenders understand that clients may default on the loan. As such, they will ask the borrower to put up the car as collateral. In case the client fails to repay, the car gets repossessed. Thus, always borrow for the right reason and budget for loan payment.
For more information about auto title loans, reach out to a professional.Share