an auto title loan
Several people who are facing financial crunch take up the auto title loans in order to satisfy their needs. Emergency situations often come at times when one does not have enough cash. People have to look out for options where they can get immediate and fast cash.
This situation has led to the growth of the Cash advances or the payday loans which offer quick money to individuals with no credit or even bad credit.
Payday loans or cash advances generally pay the loan for a fixed duration which ranges between paychecks and draws very high ARMs. The offer loans for smaller amounts ranging between $100 to $1000. However, auto title loan on the other hand can offer loans for a longer term which can be as long as 3 months depending on the need of the borrower and the lender and for amounts between $5000 to $11000.
However, there are a lot of risks in taking the auto title loan:
- Taking a title loan means that the title of the vehicle which you owned will be lien to the lender. You will need to pass on to the lender the title of the vehicle or the “Pink Slip” as it is called. The borrower needs to pay back the loan in full as per the terms agreed with the lender after which the lien is removed and one regains the title of the vehicle. However, in case you have any other eventuality and you fail to make timely payments, you must inform the lender regarding the same and ask for the extension in repayments. The lender may agree to the same with revised interests or otherwise. In case of a default, the lender takes the rights to the vehicle and owns it. They can sell the vehicle to recover the loan.
- Title loan is short term loans and may be offered for a brief period of 30- 90 days. In case of failure to pay within the stipulated time, the loans get under the “rollover” process which means the extension of the repayment period with high interests and late payment or rollover fees. This leads to a rise in the monthly payments and in most of the cases pushes the borrower into a vicious cycle of repayments an ultimately leads to the loss of the vehicle.
- In some cases the lender prompts the borrower with very attractive interest rates. These may be offered in the beginning and there might be various associated fees along with the higher interest rate in case of delay in payments. Some of the lenders post their terms and conditions on their website and offer a fair deal. Thus one should always go through the finer details and take their time while deciding the lender for the title loans.
- Borrowers stand a chance to lose their vehicle in case they default on the loan even after the Rollover of the loans. Lenders sell the vehicle through an action immediately and recover their cost of the loan. In case the amount recovers on selling the car is lower than the overall cost of the loan which will include the high interest rates on rollover, the lenders can file legal suite against the borrowers to recover the difference amount.
Auto title loans are meant for those who can repay the loan within the stipulated time. Considering the various risks it is always wise to evaluate the other loan options too.
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