A car title loan is an easy way to get some fast cash, and they’re becoming more and more popular. Just as with any type of auto loan, there are risks to consider. Below, you will learn some of the benefits and disadvantages of auto title loans.
Advantages of Title Loans
The greatest benefit of getting a title loan is the speed with which you get your cash. Most title loans are processed within 48 hours; the process is so simple that the lender only needs to be assured that your car is worth the amount you wish to borrow.
Anyone owning a vehicle can get a title loan because there are no background or credit checks to go through. Title loans are of the secured variety, meaning that the loan is based on the collateral you’re putting up (your vehicle). Title loans are the most risk-free auto loans Maryville TN for lenders, and approval rates are high. These loans are perfect for those with bad credit, and you can still drive your car while you have the loan. Simply give the title and an extra set of keys to the lender at the time of the loan signing.
Disadvantages of Title Loans
A title loan is only for a very short time (usually about a month). Most of these loans have a low initial interest rate, but for every month it’s extended, the interest rate increases. When borrowing a significant amount, it can be hard to repay in such a short time.
As is the case with other secured loans in Maryville TN, there is always the risk of losing the collateral. If you go into default, your lender can legally take your car. They’ll sell it to recoup their losses, and if they don’t get enough to pay the balance, you’re liable for that amount. If the car is sold for more than the loan balance, you don’t get that money back.
If you’re looking to take out a title loan, you should be aware of the many risks involved. Many people have defaulted on these high-interest auto Loans Maryville TN, and have lost their only means of transportation. If you need quick cash, there are much smarter options such as credit card cash advances, paycheck advances and consumer loans.
