An auto title loan is a type of loan that can be secured using the title of your vehicle. Your vehicle will be used as collateral. Inability to repay the loan means the lender will take control of your vehicle.
Auto title loans are perfect for people that lack a good credit rating and are in need of emergency cash. No credit check is performed and the requirements are quite lenient. The trend of auto title loans is one that has come to stay.
According to this statistic, the population of individuals that have procured title loans has doubled over the years. Over 2 million people secured auto title loans with their vehicle in the last year. The popularity of car title loans has skyrocketed as a result of the ailing economy.
Most people are turning to auto title loans as a result of the increasing reluctance of banks to give out personal loans. The United States of America boasts about 7700 auto title lenders in about 21 states. Billions of dollars of interest is paid to lenders and this trend doesn’t seem to slow down.
You must be very cautious before you decide to go for an auto title loan. You should have a stable source of income and be sure of your ability to get the best out of the loan. Itemized below are some tips you should take note of before opting for an auto loan company.
1. Avoid notorious auto loan companies
There are a lot of shitty auto title loan companies around and they are all looking for people with low credit ratings that will agree to their shady deals. These companies usually have unscrupulous terms hidden in their agreement. Try to do your due diligence and avoid these companies while looking out for reasonable companies. Title Loan is an auto company you can trust; see more here.
2. Ensure you understand the interest rates
Apart from the repayment of interest, you will have to pay back a certain percentage known as interest. The interest rate for most car title loans is high and ranges from 15% to 20%. Ensure that you can pay back your loan within the due date. Failure to pay back means that the interest rate keeps skyrocketing.
3. Avoid opting for a low monthly payment
Most lenders often deceive borrowers by giving them a low monthly payment option without explaining the loan terms. Some car title loans have interest rates that spiral to more than 100%. This means you will be paying back for a very long period until you are let loose. Avoid falling for this trick by ensuring you go through the loan terms thoroughly.