Do you know that your vehicle, especially your car, can help you in more ways than you could imagine? You can deal with a financial emergency with title loans. Yes, it’s true. A title loan is a type of secured loan wherein the money-seeking can use the vehicle as collateral to obtain a loan.
As this loan is processed immediately and online lenders are not much concerned about the credit score of the borrower, title loans from US Installment Loans have become very famous these days. It’s so common and famous that nearly 2 million people avail of this loan facility every year.
If you’re new to this loan type, we suggest being fully aware of the pros and cons before making further moves. Here is a crisp list of title loans’ benefits and drawbacks.
Avail A Title Loan Without Any Hesitation
A title loan can fix the urgent need for money in no time. People prefer to avail it via online loan services over other money-borrowing options like traditional bank loans, payday loans, pawn shops, financial institutes, and many more because:
- It’s A Hassle-Free Option.
You don’t have to do much preparation to become eligible for a title loan. It doesn’t require a credit score, which makes it viable for all sorts of borrowers. One can easily apply for a title loan online. There is no need to stand in line, provide a lot of documents, and wait for days for approval. You can sit in your living room, upload only a few details, and enjoy instant approval.
Almost everyone is eligible for this loan. You can apply and get approval for a title loan as long as you’re above 18 years of age, own a vehicle, have a valid driving license, and have a stable monthly income. That’s it.
- You Can Receive Funds Instantly.
As the application and approval process is not too lengthy, you can get funds the same day. In some cases, you can receive the funds within a few hours of the approval as well. This is why it’s the preferred option when one needs funds without any delays.
- You Can Borrow A Decent Amount Of Money.
The title loan amount is generally 50% of the actual worth of the car. If the car is brand new, you can avail yourself of nearly 90% of its total worth. Basically, you can avail any amount that is below the actual cost of your car or other vehicles that you’ve used as collateral.
- You Can Still Drive Your Car.
Even though you would be using your car or other vehicles as collateral to avail a title loan, there is no need to leave it at the door of the lender. In fact, you can drive your vehicle for as long as you want. This is a great advantage as the borrower doesn’t have to find other modes of transport while availing of a title loan.
These advantages are impressive and persuasive. But, one must not forget that a title loan is not always a winning game. It does have certain disadvantages that entail:
- High-Interest Rate
Title loans are easy but come at a high-interest rate. It’s been observed that the interest rate can go as high as 300% APR. It’s too much and will make repayment very difficult. This is why nearly 220 people lose car ownership every hour in the USA. You must remain extra cautious while availing a title loan. It’s wise to collect quotes from multiple lenders, compare the interest rate, and pick the one that suits you best.
- Extra Processing Fees
Availing of a title loan can be a little more pocket heavy if the lender is charging some extra processing fees. The applicable fees are lien fees, loan origination fees, late repayment fees, and so on. However, not every lender will charge these. So, you need to make sure that the lender you’re choosing is offering title loans at affordable costs and with controlled fees.
- Aggressive Collection Methods
At times, some lenders can go above and beyond to collect the loan amount. It’s been observed that lenders have approached employees, friends, and other acquaintances to collect information on their whereabouts.
- Limited Legal Approval
Not every state has approved title loans. Some even imposed strict restrictions on this type of loan. As per the recent updates, only 30 states have approved this loan type. So, not everyone is all set to avail of this loan. If you don’t reside in a state where it’s legal, you need to travel to a state where it’s approved, which is another hassle.
Make A Wise Choice
Not everything about title loans is glitz and glam. It comes with a fair share of advantages and disadvantages. Weigh down both these aspects carefully and then make a move. You can significantly reduce the disadvantages by choosing a verified and trusted online lender.