What Are Auto Title Loans?
Are you in desperate need of money to solve your personal financial problems and have no ways to solve it? Don't worry!! Your car will be your source of money to solve all such issues. The recent recession has helped borrowers like you in a great way. Several automobile lenders have reduced their interest rates to boost their business and offer various kinds of loans to help people managing their financial instability.
If you have a car of your own, auto title loans could be good source of funds during a cash crisis. As long as you own the title to your auto without any liens against the car, you can get title loan approved within minutes. Credit checks are not necessary as your vehicle is used as collateral for your loan. Some lenders also ask you to give them a spare set of your car keys. This is for them to repossess your car in case you fail to pay the interest for your loan.
Title loans also sometimes know as car equity loan are meant for short-term use. Its payment differs from 14 days to a month from the day the loan is issued. If you run short of funds for paying off your loans, the loan will be rolled over for another payment period. In case of roll-overs, the rate of interest is higher. This is done to keep the loan from defaulting. If your loan is rolled over a few times, you will have to pay a great deal. This amount is much more than the amount of loan you had applied initially. Annual percentage rates on several title loans are of three digits.
Automobile title loans are low financial risks for lenders. This is because borrowers quite often take out loans for fewer amounts than the value of their vehicles. However, borrowers could get up to the retail market value of their vehicles with title loans.
Title loans can turn out to be a great financial risk for customers, especially for those who borrow more money than they require. One missed payment on title loan can result in your auto being seized immediately. In some states if your car is seized, the lender can keep additional funds which are generated by selling your vehicle above its retail value. In such cases, you are still likely to pay back the loan.
To sum it up, car title loans should be considered as short term solution for your financial needs. The rate of interest and the risk involved is very high in this kind of financial borrowing. The borrower must analyze the financial needs thoroughly and should make a wise decision when it comes to auto title loans.