How Does A Title Loan Work & What Can I Expect?
Title Loans - How Do They Work
By using a pink slip as collateral you can often get a larger amount of money than what you would see with a typical short term loan. Additionally, most companies are interested in the vehicle’s equity instead of your credit report or past payment history. Finance terms for a secured loan are much different than what you would expect with an online payday loan or cash advance. Much like an installment loan, you can pay off the full amount over a period of months or years. Compare that to a payday advance where the full amount is due within a period of weeks. Most car title loan lenders will also allow an early payoff with no pre-payment penalty. This is the ideal outcome as you can get your emergency cash and avoid the high interest charges.
What To Expect When You Take Out A Title Loan
For the most part, a title loan company wants to know that there’s enough equity in the vehicle in case of default or repossession. Even though your credit score and borrowing history aren’t critical with this form of borrowing, it’s still important to have good credit. You should always work to improve your credit history. We recommend to start with information on how you can improve your three credit bureau score. This includes major underwriting factors like your FICO score and payment history. Once a consumer brings up their overall credit rating they can move on to other financial options that are less costly. A title loan may be an option if you’re looking to borrow a significant sum and your credit is less than good.
What To Look For When Choosing A Title Loan Lender
Another factor to consider is what type of reputation your company has with of processing and customer service. Can you contact your title loan rep during normal business hours? Will your lender work with you to avoid a title loan repossession or missed payments? You can easily look up this information online and use it to make a better and more informed decision.
Lastly, try to find a title loan company that’s willing to work with you when it comes to financing terms and loan amount. Don’t choose a company that wants to give you more money than you need. They’re only doing this to extract more money from you in future interest charges. Always ask your rep, if they can lower the interest rate and be sure to shop around to get the best title loan terms. Essentially, you want a company that understands things come up. Not everyone can make their payments on time and there may be times when you can’t get past a financial emergency. Look up past complaints or comments about your lender to determine if they will help you down the road if you fall behind or need a repayment plan.