Title loans are the most popular type of loans in the market today. Why? Most people don’t want to complicate things, especially when it comes to making financial decisions. And title loan lenders don’t require as much documents as in bank loans and other lenders.
The system of title loans is fairly easy. In most cases, you are only required some form of valid identification, and a certified title of ownership to a valuable property, may it be a car, a house, or something as valuable. However, a loan this easy to obtain does come with a few cons. So before you decide on getting one, it is important to know the following truths about getting title loans.
20% Chance of Losing Your Title
Statistics reveal that one out of five title loans get settled by default, which involves repossession of the property that’s on the line. It’s so easy to obtain a car title loan for whatever purpose you need it for, but you’re also creating the risk of losing your car in the process. But then again, if you’re willing to give away your car for a considerably reasonable amount of money, then a car title loan just may be the thing you need.
Continued Use of Your Property During The Loan Period
This is one of the frequently-asked questions in car title loan forums: Can I still use my car as I’m settling my car title loan? The answer is yes. Technically, what car title loan lenders only require of you during your loan period is your car title, so you can still drive your car around town with the loan you got off it.
80% of Title Loans Involve Refinancing
Such a huge percentage of title loans resort to refinancing. If you don’t want to settle your loan by losing ownership of your collateral, your best bet would be to refinance your title loan. This means you’re going to extend your loan period and repay your current loan plus a new one added with high interest rates. But be careful because if you don’t secure your finances, you may get yourself in deep trouble. Refinancing is a slippery slope, after all.
Credit History is Insignificant
The major reason why title loans have raked in so many borrowers is the fact that they don’t require a good credit history. In this case, a good credit score is irrelevant. If you need money as soon as possible, you’ll find title loans in Pittsburgh helpful.
Quick cash and more lax requirements make title loans a very popular option for cash-strapped people. They may be looking for ways to finance a business venture, or an emergency medical procedure, and many others. These benefits are enough for them to overlook certain red flags such as higher interest rates and the risk of repossession. The fact is, title loan periods are shorter than in traditional loans, so it is only apt that higher interest rates are needed.
Obtaining a title loan is a tricky thing to get yourself into, but don’t be afraid to jump at the opportunity when it presents itself.