Learning All About Auto Loans

Three Things to Know Before Getting a Title Loan

1 August 2016

Eva Kennedy

Title loans can be a great way to get the cash you need. This is especially true if your credit isn't very good and you have few assets to offer as collateral for a loan. But if you own your car and have the title, you will likely be able to get a title loan. There are, however, a few things you should keep in mind before rushing into obtaining this type of loan.

Make sure the company will take your car as collateral

There are many different title-loan companies, and some of them will not loan money on older models. If you have a car, for example, that is 20 years old, some lenders may not consider you for a title loan. For this reason, always ask if your car qualifies for a particular lender's policy for a loan. You don't want to waste time filling out paperwork for nothing.

Make sure the company is reputable

A good reputation for title loans is essential. You want to get money from a lender who has been doing this type of business for many years. Preferably, you want a lender whose main line of business is title loans. This type of company will offer the lowest interest rates and will likely offer installment payments for the loan stretched out over several months. You should avoid lenders who offer title loans as a side business. Some payday lenders are like this, but not all of them. You can recognize these lenders by their shorter financing periods and higher interest rates.

Make sure you can pay back the loan

Do not take the responsibility of repaying a title loan lightly. If you have taken out an unsecured loan in the past, such as a payday loan, and have had trouble paying it back, the worst thing that likely happened to you was that you hurt your credit. But a title loan is a secured loan. If you do not pay the money back, you will lose your car. Since this type of loan is closed in, you will only have a certain number of payments to make. If you can afford the monthly payments, you are likely to be able to afford the loan.

A title loan can be a great deal for a working person. You can get the money you need and still drive your car to work and wherever else you travel. But be sure to keep the information above in mind before you sign on the dotted line.

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