When you need money quickly to cover urgent expenses, consider taking a short-term loan that will give you access to cash within hours. One popular option is a car title loan. This guarantees approval typically in less than an hour without much bureaucracy and with no credit check involved.
With title loans, you use your vehicle as a collateral against for cash. It’s an easy way to get money and catch up on bills, but keep in mind these title loan dos and don’ts.
Do your homework and research the title loan companies
As car title loans have gained popularity in the last several years, there are also many companies that offer such services. Although the terms are pretty much the same, each company has its own specific requirements and conditions, interest rates and repossession practices. Therefore, it is important to do a good research prior to choosing one. Please note that you need to select a company that has a license to operate in your state, otherwise you won’t be able to use its services.
Do choose a reputable company
The best thing you can do is ask for recommendations and check out reviews. The last thing you want to do is borrow money from a company that uses deceptive practices, has complaints on file or has unfavorable payment negotiation and repossession practices.
Do use title loans when you are truly strapped for cash
Car title loans look very attractive because they are easy to get, however you need to keep in mind that the interest rate is quite high compared to other types of loans. This means that if you wait to repay the loan over its entire period, you will have to return much more than you borrowed. And if you don’t repay the loan, you will lose your car, since the company has the right to repossess it. Use car title loans for emergencies when you really need urgent financing and not to finance purchases, trips, or everyday expenses.
Do repay your loan as fast as possible
As we already mentioned that the interest rates are quite high. Therefore, it is in your best interest to repay the loan as soon as possible, preferably in a month or two. This way, you won’t feel the burden of having to return too much money.
Do check your credit history
Even though title loan companies don’t check your credit score it is a good idea to do it yourself. It will provide you with useful information and you can seek advice on how to get your finances back in order.
Don’t choose a company based only on the interest rate
Even though the interest rate is one of the most important factors to consider, it is not the only thing you need to consider when choosing a title loan company. Make sure that the other terms are favorable as well. This includes, for example, how many times you can miss a payment before your vehicle is repossessed or what the conditions are for the repossession.
Don’t be shy
When you approach a car title loan lender don’t be shy and ask as many questions as possible. They can concern the interest rate, the loan period or other requirements. Make sure that you understand everything written in the contract prior to signing. You should also be confident enough to negotiate some of the terms. Since there are a lot of car title loan companies on the market your provider will be more willing to go a point down in their interest rate rather than losing you as a customer.
Don’t extend the repayment period
Do not be tempted to extend the title loan month after month. This will result in the amount you need to repay being exponentially higher.
Don’t take many title loans annually
The interest you repay if you take a number of title loans in a given year will eat up a huge chunk of your income. Consider seeking other assistance if your financial situation remains poor over a long term.