Title loans are a form of secured, short-term loan that doesn’t usually require the use of a credit report. Some lenders don’t even require income verification.
For the title loan, you’ll have to provide to the lending institution the title to your vehicle (or motorcycle) as well as your car will be used as collateral.
In exchange, the lender will provide you with a small amount of money that you’ll need to pay back within a brief period of time, typically in 30 to 60 days.
Car title loans have their own drawbacks
While car title loans may give you access to quick cash, they have a number of drawbacks. Here are some to remember: a popular car title loans online notes
They can come with APRs as high as 300%, or higher significantly more than you’d have to pay for other types of credit.
They have very brief durations
Title loans for cars typically need to be paid off promptly. Within 30 days typically. If you are unable to repay the loan in time most lenders will allow you to transfer the debt to another loan. However, rolling the loan over will mean paying higher charges as well as interest on top of the initial amount which can push you deeper into the debt.
Your car could be stolen
Your car is secured by a title loan. If you are in default on your repayments the lender may confiscate your vehicle and then sell it, meaning that you’ll lose your main mode of transportation.
Personal Loans vs. Car Title Loans
If you’re in need of money urgently then a personal loan might be an ideal alternative to a title loan.
Contrary to title loans for cars, the majority of private loans are secured, which means there’s no chance of losing your vehicle. Personal loans are also generally offered with considerably lower interest rates and charges than title loans.
In addition, you could be given as long as seven years in which to pay off an individual loan, contingent on the lender, making the monthly payment easier to manage.