What are the Pros and Cons of Title Loans

Are you in need of some money for an emergency? A auto title loan is one of the fastest ways to get an immediate injection of money for an emergency or for a short-term need. How does a title loan work? Well, the lender holds onto the title of your automobile and uses it as collateral for you to borrow against.
It is important to realize that if you pay off the auto title loan on time and on budget (or before it is due) these funds can help you through a difficult financial situation. However, you should educate yourself about a car title loan before you get one and learn both the pros and cons of title loans before you begin.

Pro: Auto title loans can be gotten even if you have bad bad credit.

Many times when you want to get a loan having a bad credit rating prevents you from getting the money you need. Lenders take just once glance at your credit history and write you off. They will tell you that they either can’t help you out–or want to charge you ridiculously high interest rates so that the loan isn’t worth it. This is not to mention the fees that many lenders tack on.
Title loans, however, allow the borrower to use the car as collateral so you can get a loan even if you have bad credit. If you are in a difficult financial situation and you don’t have a good credit score or credit history–you may find yourself in a situation to where a title loan is the only option for you.

Con: High Interest rates

It is important to realize that title loans do charge very high interest rates. Since you can get a loan with bad credit, the lender will look at the borrower with risk, so the lender will charge more money. You need to look at the annual percentage rate that car title loan companies charge and make an educated decision. Late fees, and even car repossession, are all possible if you do not know what you are doing.

On the flip side, if you pay back a loan quickly, you will not have to pay as much interest and with auto title loans there are no prepayment penalties. Also, you need to realize that if you default on the loan the lender has the right to repossess your car.  Of course many people who scream that car title loans have high interest rates don’t take into account how high bank interest rates are if you bounce a single check. Many times if you are .01 overdrawn the bank charges you anywhere from $20-$35…many times. The interest rate on THAT is huge.

Pro: Fast cash!

Many times you can get the cash you need in the same day you apply. It all depends on how quickly you submit your application and get the lender the information you need. If you have a medical bill, funeral to pay for, vehicle in desperate need of repair, or an emergency in your house a title loan can be the thing you need to turn to. It can give you an immediate influx of cash.  The best part is, if you are 100% certain that

you can pay back the loan you are getting the risk of putting of your vehicle is zero. And because you don’t have to have good credit history with this type of loan, you won’t have to worry about your financial past. You can focus on the current emergency.

Con: The risk of losing your vehicle

Of course you need to be realistic. Anyone who says title loans have zero risk is flat out lying. There IS the chance, if you do not pay back your loan, the lender can take your vehicle away. The word “title” in “auto title loan” or “pink slip loan” refers to the collateral you’re putting up. If you don’t pay the lender back or fall behind you’ll lose that title. The car then becomes the lenders and not yours…so be aware of this fact.

Of course, due to the high interest rate on this loan you want to make sure you can afford the payments and can pay back the loan in a timely matter. If you have solid cash flow then the risk of losing your vehicle due to repossession is low. If you don’t have future money coming in, however, the risk is can be high.

Pro: A title loan is NOT a payday loan.

Payday loans have been considered predatory and can even charge ridiculous rates of interest. If you don’t want hassle getting a payday loan–and many people don’t, then getting an auto title loan can be one option for you to consider.

If you don’t have great credit to get a loan, you will discover that auto title loans can charge really high rates of interest. The best part is because it is not a payday loan you are not linking your future paychecks to a payday loan.

Con: Some companies charge outrageous or hidden fees.

Make sure to keep your eyes and ears open for fees. Make sure to work with a reputable lender like Big Car Title Loans if you’re interested in this type of loan. Make sure to work with a company that is licensed to do business in the state of California. There are many lenders that make it difficult for you to pay back the loan. They tack on fee after fee and before you know it you’ll feel as if you are drowning. Take your time and carefully read the fine print from the beginning and you’ll be able to see all the fees well in advance. Don’t get surprised by something you could have read about ahead of time.

Pro: Title loans are simple to get

Since there is no heavy credit check involved, a title loan can be easy to get. If you work with a reputable lender and your vehicle qualifies, you’d be amazed at how fast you can get the cash you need. In California you can get as much as little $2,500 to up to $50,000 in some cases. And when you work with Big Car Title Loans you will find that some of these cons are wiped away by lower APR and bette terms that make getting at title loan better off for you.

But let’s be honest: With ANY loan there is some risk involved. If you work with the right lender and know your stuff before hand, and you have a reasonable expectation of future cash-flow, a loan can be a powerful tool for ensuring you have the cash you need now. All it takes is using your head a bit and some thinking to make sure that a title loan is win-win for both people. This is why we give a list of pros and cons–so you can better understand how auto title loans work.

If you are looking to get an auto title loan for yourself, you can continue to read here or call us at (818) 217-8960 or fill out the application form on the page here or go here:  http://bigcartitleloanslosangeles.com/ If you some reason you don’t hear back from one of our friendly representatives within a few minutes during normal business hours do not hesitate to call us.