Often, when you are in a tight financial budget, there is no choice but to get a quick loan. While many people try to avoid car title loans at all cost, however, there are still good reasons it is worth considering. Read on to find out.
Why they say you should avoid it
Car title loans are a type of secured loan wherein you can use your vehicle as the collateral. In here, you surrender your car title (the actual printed copy) for the duration of the loan. As this type of loans is designed to be quick ones, the repayment duration is also short, usually no more than a month.
One of the most common criticisms against car title loans is the relatively large amount that you have to repay. For starters, the interest rates given by the lenders of this type of title loan are higher than banks and other institutions. There are also the various fees that you have to deal with. With a shorter repayment duration, you might not be able to settle everything on time, which can increase the fees you will pay. These are just misconceptions, though.
Why is a car title loan still worth it?
One of the biggest reasons you should still consider this option is the speed at which you can secure one. As you own a vehicle and have a steady source of income, industry professional Utah Money Center explains that you can immediately apply for one. All you need to do is fill out an application form. You don’t even need to go through a lengthy credit check.
What’s more, contrary to popular belief, you can actually still use your car during the duration of the loan. While your title is with the lender, he can only repossess it after the final payment date. And some lenders are actually lenient with these dates.
How can you make it work for you?
The trick here is to know when to use car title loans. For instance, if you are intending to use these to pay current bills, better stay away, as you will only find yourself in a tight squeeze soon enough. Instead, limit its use to emergencies.
In addition, before heading to a lender, be sure to know his track record first. Ask from people that you know who already had transactions with him. Don’t forget to shop around for others that offer better rates and terms.