The Dos and Don’ts of a Car Title Loan
Table of Contents
- What Are Car Title Loans?
- Why Do People Take out Car Title Loans?
- How To Use A Car Title Loan
- The Dos and Don’ts
- What Do You Mean By Short-Term Solution?
At some point, anyone who has considered taking out a loan may have heard of payday loans and car title loans. The grey reputation these financial products have earned in the finance industry is not necessarily stellar, but much of the controversy surrounding these loans have to do with the borrowers who take out these loans. Unfortunately, many times borrowers of these loans are struggling financially and are unable to get financing elsewhere; payday loans and car title loans are their only option. The usury laws governing each state across the country will differ concerning these lenders, but in every case, the laws aim to regulate lending practices and reduce predatory lending. In any situation where borrowers are taking out a loan, they should do so with caution and wisdom. Ultimately, lenders and borrowers should feel confident in the borrower’s ability to pay back a loan, and in the case of car title loans, TNL Car Title Loans is always mindful of responsible lending and borrowing for our customers. When our borrowers take out a car title loan, we encourage borrowers to do so as a short-term loan, and to pay off their loan as early as possible for their own benefit. Here are some of the ways we encourage and caution our customers regarding the dos and don’ts of a car title loan. But first, what is a car title loan?
What Are Car Title Loans?
Car title loans are loans that allow a borrower to use their car as collateral to obtain a loan. If the borrower is the owner of their vehicle, they can use the value of their car to take out a loan. The borrower will have to transfer their car title under the lender’s name until the loan is repaid in full. However, while the loan is being paid off, the borrower can use the car as needed. The title will be transferred back to the borrower once the loan is paid off in full. If the loan isn’t repaid according to the repayment agreements, the lender has the right to repossess your vehicle. Car title loans are also commonly called auto title loans, title loans, or pink slip loans.
Why Do People Take Out Car Title Loans?
Although all loans carry a certain amount of risk, why do people continue to take out car title loans? Here are some of the main reasons why:
- Fast access to cash. Companies such as TNL Car Title Loans are able to provide emergency cash to those who need access to a loan right away. Banks are unable to compete with the speed with many companies because of the loan processing time.
- Quick loan process. Taking out a loan with the bank may take up to a week or longer to process, and that’s no guarantee of approval. However, TNL Car Title Loans can help applicants find out if they qualify for the loan in just 15 minutes.
- Bad Credit. Another reason why borrowers are taking out car title loans is that those who struggle with bad credit are likely to be turned down for a loan with the bank. However, car title loans are not based on credit scores but rather the value of the borrower’s vehicle, which gives more opportunity for the borrower with poor credit to receive a loan.
- Lack of other opportunities. Unfortunately, many banks have stricter eligibility requirements and borrowers who don’t meet these requirements are often left without other options. TNL Car Title Loans closes the gap for borrowers to get a loan even if they don’t qualify in traditional banks.
How To Use a Car Title Loan
So how do people use car title loans? Here are some of the ways you can use this loan:
- Important medical bills
- Sudden emergencies
- Utility Bills
- Plumbing repairs
- Home remodels
- Wedding expenses
- Funeral expenses
- School Tuition
- New home appliances
- Business expenses
- Work equipment
- Personal use
The Dos and Don’ts
Car title loans offer flexibility and options for the borrower who is unable to meet the requirements of the traditional bank loan, and for those who are in emergency situations requiring fast cash. However, TNL Car Title Loans encouraged responsible practices as our customers take out a loan. Here are some of the dos and don’ts when it comes to a car title loan.
What Are the Dos of a Car Title Loan?
- DO make sure that you discuss with your loans officer the flexible payment plans that are available
- DO make copies of your paperwork, including your car title, driver’s license, and other documents to have on hand
- DO ask as many questions as possible to address your concerns
- DO read over the contract to make sure the terms are clear
- DO save up enough money as a buffer in case you miss a payment
- DO use a car title loan as an opportunity to help you build up your credit score by making payment on time
- DO use a car title loan as a source of emergency cash resource
- DO use a car title loan responsibly as a short-term solution
- DO make sure you feel comfortable and confident with your loan payments to discourage default
- DO make your payments on time and in full amounts
- DO pay off your loan as early as you can to save money since there are no penalties
- DO keep your car for personal use while paying the loan
What Are the Don’ts of a Car Title Loan?
- DON’T sign anything until you read its terms and understand the contract
- DON’T take out a loan unless you feel confident of repayment
- DON’T let a poor credit score keep you from qualifying for a car title loan
- DON’T use a car title loan as a long-term financial solution
- DON’T get a car title loan unless the car title is under your name
- DON’T get a car title loan unless your vehicle is registered and has insurance
- DON’T get a car title loan without a source of income each month
- DON’T put yourself at risk for default and lose your car
What Do You Mean By Short-Term Solution?
One of the reasons why we encourage our customers to consider car title loans as a short-term financial solution is to help them utilize their loan to the best of their situation. Car title loans are accessible financial solutions but are not meant to be used as a long-term financial strategy because of high annual percentage rates. We offer quick access to cash to borrowers who have the means of backing their loan with collateral, an alternative means of reducing risks for a lender. When lenders and borrowers forgo the involvement of creditworthiness in order to determine loan eligibility, lenders will need to use assets as a guarantor of the loan rather than a borrower’s credit score. Therefore, many loans involving the use of collateral will also have higher interest rates as a way of offsetting risks and the borrower’s likelihood of defaulting on a loan. For this reason, we encourage borrowers to view car title loans as a short term solution so borrowers can benefit the most from their loan.
Car title loans are meant to be used by borrowers who understand the full risks and measures involved. We encourage our customers to take advantage of using TNL Car Title Loans as a way to build up their credit score so they can get a second chance at a great financial future. Whatever your situation is, TNL Car Title Loans wants to help you overcome your financial hurdles and meet your needs for a loan. Get started today by giving us a call at 888-663-7074 or applying online with our quick form here.