There’s nothing worse than waking up bleary-eyed to an empty wallet; an equally empty fridge; and a mailbox full of utility bills and notifications. You looked at the calendar and realized that payday is still two weeks away. That sucks!
Looking to comfort yourself, you went to check out your garage and let out a sigh of relief: “At least I still have my car.”
Here’s the good news however: that car of yours and a title loan may be just what you need to get out of this financially sticky situation!
Title Loans Defined
Also known as auto-title loan and pink-slip loan in the United States, a title loans is just one of the secure loans available to consumers. Unlike other loans however, the borrower can use their car’s title as collateral. When taking out such a loan, borrowers allow the lender to place a lien on their vehicle and submit their car title (temporarily that is) in exchange for cash.
Once the loan’s full amount is repair, the lien is lifted and the car title is sent back to the owner. However, here’s something you pay close attention to: If the borrower fails to pay the amount borrowed in time, it’s very likely that the lender would repossess the car and sell it to cover the borrowed amount.
The Application Process - How Does It Work?
The application process differs from one lender to another. However, applying for a title loan usually requires face-to-face transaction at one of the lender’s branches.
If you’re thinking about taking out a title loan, it’s best to bring your Driver’s License; State or other photo ID; a proof of residency like a cellphone bill; references as well as your vehicle tag to ensure that it’s registered. While loans such as this don’t require extensive credit checks, lenders try to minimize their risk by performing quick identity checks using the references and IDs provided above.
Once your application is completed, you only have to wait for the lender’s decision, which usually doesn’t last longer than 15 minutes.
Its BIGGEST Advantages
Let’s not sugar-coat things here: Like the ever-popular payday loans, title loans entail higher interest rates than other financial sources. Depending on the lender, the interest rate averages 300% when expressed as an annual percentage rate.
Having said that, title loans have numerous advantages that other financial and loan sources don’t have:
- First off, your credit rating will not be looked into…and it won’t be affected whatsoever whether you’re approved for the loan or otherwise. Aside from slashing down the approval and processing time, this eliminates the possibility of the borrower ending up with a worse credit score after the application.
- 15 minutes – that’s usually all the time you and the lender need to come up with a decision. For consumers and borrowers who need money FAST, this benefit is invaluable.
- Loan amounts can be as little as $100. Yes, title loans allow you to cover your most pressing and urgent expenses without going overboard with the loan amount and getting buried in interest rates.
“But Is It Safe And Fair?”
Short-term; comes with relatively higher interest rates; and requires you to own a vehicle outright – are title loans risk-free? No, it’s not. But consider this: When it comes to financing and banking, there’s always risk.
So you missed your mortgage payments?
The bank is legally responsible to repossess your home.
So your credit card payment was late?
You can expect to see penalties and fees on your next credit card statement.
Mortgages, credit cards, title loans, and everything else in between entail risk of some sort. And risks are not exclusive to borrowers. Lenders, too, have to realize that the possibility of a borrower running away and not paying the loan back is very real.
So now the question becomes: Are the risks in title loans manageable enough for consumers for it to be safe and fair?
The answer is a resounding YES.
Paige Marta Skiba (who has a Ph.D. in Economics from Vanderbilt University), along with Kathryn Fritzdixon (a student), and Jim Hawkins (Asst. Professor of law at the University of Houston Law Center) were asking the same question.
From November to December 2012, they surveyed over 400 title loan borrowers across Idaho, Texas, and Georgia as they partner up with a firm who offers title loans. The study drew the following facts:
- Not even 10% of the borrowers had their vehicles repossessed
- Below 15% of the borrowers confirmed that, without their car, they have no other means of transportation and can’t get to work
- Only 1.5% lost their jobs due to title lending
- And last but not the least, nearly all of the consumers who had their cars repossessed were overly-optimistic about paying back the loan
Bottom line: The risks are not insignificant. At the same time however, the minimal percentage is a testament that the dismal scenarios and consequences that critics bring up are very remote…provided that the borrowers thoroughly calculate how much they need to pay back and only take out what they REALLY need.
Where To Get Title Loans?
Here at AlliedCash.com, you can take out a title loan (cash advances and installment loans) minus the hassle of lengthy credit reviews and approval process. We can help you turn that car into cash so you can fill-up your wallet and fridge and get rid of the bills at the same time.