The loan amount you can borrow is between 25 and 50 percent of the overall value of your car and the lender will assess your vehicle to determine its value. Some loans are as little as $100, while some are greater than $10,000 instant online title loan paydaychampion.
When is the best time to get a Title Loan?
As per the Consumer Financial Protection Bureau, 20 percent of car title loan customers have their vehicle confiscated when they’re unable to repay the loan incomplete. Title loan lenders for car titles are able to make the bulk of their revenue from the borrowers who constantly make new loans to cover the existing ones. Over half of auto title loans turn into permanent debts and over four in five automobile loans have been reborrowed since they aren’t repayable completely in one payment.
This is why you should consider alternative ways to finance your loan prior to applying for the title loan. Alternative payday loans offered by credit unions and personal loans from credit cards, online lenders as well as borrowing money from your friends as well as family can be great alternatives to losing your car.
Pros and Cons of Title Loans
Before you apply for the title loan, you must review all the advantages and disadvantages. This will help you decide whether this is the right decision for you.
No credit check:
- Most title loans don’t require a credit check. This is great news for those who need to borrow cashand have exhausted all other options to consider and don’t have enough credit to be eligible for an ordinary loan.
Fast approval and easy cash access:
- Because there isn’t a credit check, it takes only some seconds for lenders look over your application and car. Once you’ve been approved, you’ll get funds in a matter of minutes or within several days.
The potential for debt traps:
- The CFPB says that over half all auto title loans end up as the burden of debt for those who borrow. The result is that borrowers are forced to get loans to pay off the old ones, thereby creating the cycle of debt that they aren’t able to be able to get rid of. This is dangerous and harmful and can keep you in the debt cycle for months following when you’ve originally taken out a loan.
High interest and charges:
- APRs for title loans can reach as high as 300% due to the interest rate as well as finance charges and charges. The costs are cumulative, and only make your financial obligations further.
Terms of repayment that are short:
- Title loans typically have a repayment period of 15 to 30 days. Compare this with traditional loans, which usually come with repayment terms ranging from 6 months to 3 years, based on the amount you’re borrowing. A 15- or 30-day time frame for repayment doesn’t always provide you enough time to get the money for you to repay the loan you borrowed in addition to the higher APR.
You may lose your valuable assets.
- Title loans for cars could put you in a terrible situation: you could build up a huge burden of debt or sell your vehicle. Keep track of your obligations to avoid the problems that title loans could cause.