How To Choose The Right Title Loan Company
Title loans have become very popular for people who need to get some fast emergency money, title loan in general do not worry about your credit score.
Getting fast money can be easy, but if you choose the wrong auto title loan company, it can be hard to get out of it, or even worse, you can end up having your vehicle repossessed, and losing it for good.
But how do you know what company you should choose? They all seem the same, and they all seem to be charging extremely high-interest rates.
Are title loans even a good option when you need to get some fast money? Are there any companies that you can trust?
If you want to get an auto title loan, then it would be best to make sure that they are in compliance with the Consumer Financial Protection Bureau (CFPB).
The CFPB was created to protect all consumers from fraudulent lenders and practices, so it is important they are in compliance, and that they a fully licensed to fund title loans in your state.
Watch Out For Car Title Loans
If you are thinking about getting a car title loan you need to be very careful. When you are searching it is important to know what the interest rate is, some car title loan companies are charging over 300% APR!
Obviously choosing a company that is charging triple-digit interest, is a company that you need to stay well away from.
Watch out for 30-day title loan terms, as the term is short, it can be difficult to have the money in time to pay off your title loan.
Be very careful if the title loan company does rollovers, this means that after the 30 terms of your title loan are over, and if you have not paid it off, the lender will rollover your interest, and renew it for another 30 days.
Rollover title loans are debt traps, as many people can never get out of them, as none of the payments are going to their principal, it is all going to the interest.
Interest-only title loans are also another problem because all of your monthly payments will never lower your principal balance, you will only be paying your interest and maybe late fees too.
No credit check title loans can also be very dangerous, because the lender has no idea, if you a capable of making your monthly payments, this is irresponsible lending.
Choosing the right title loan company
Vehicle Repossession With Title Loans
Having your vehicle repossessed with a car title loan can happen, and with lenders that are charging triple digits, it can be difficult to make the monthly payments, or eventually, there may be no way of paying the title loan.
Repossessions happen with 30-day title loans, because the problem is, if you do not have all of the money to pay off your title loan, the lender can decide to repossess your car.
Some people who have rollover title loans can never find a way out of this debt trap, and their cars can eventually be repoed.
Some borrowers can never see the end in sight with interest-only title loans, and if the monthly payments are not paid, the borrower will end up losing their car.
Choosing Title Loan Companies Wisely
Are there any good car title loan companies out there? How can you find one that you can trust? It is up to you to do your homework, it will pay off, but you need to be very careful.
It can be very difficult to know what car title loan company that you can trust. So if you are thinking about getting one, here is some information for you, that will help you to find the right title loan company.
The most important question you can ask when you are looking to get a car title loan is, what is the interest rate that you charge?
You must stay away from triple-digit title loans, they are just too expensive, your monthly payments will be hard to handle, and there will be a higher chance that you will default on your title loan contract.
If you are searching online there are companies that will do title loans for 36% APR, of cause, this is much more expensive than a bank loan, but if your credit is poor, the bank will not qualify you.
When you are shopping for a car title loan, it is also important to ask how long are their terms, and once again you must stay away from short-term 30 title loans.
There are some companies that will offer you a car title loan term from 24 months to 48 months, with no prepayment penalties, so this will keep your monthly payments low and affordable.
It will be important to also ask if there are any early termination fees, you want to stay away from companies that charge pre-payment penalties, there are options out there for you with no additional fees.
The lender will use the wholesale value of your vehicle, they might use the Kelly Blue Book or the NADA, to find out your wholesale value, and to see if you have enough equity in your car.
Some small lenders will only lend you 40% of the wholesale value, and some of the larger companies will lend you up to 85% of the wholesale value.
Online Reputation Title Loans
Choosing a title loan company can be difficult, but if you ask the right questions, then you have a much better chance of getting a car title loan that will work for you, and the monthly payments will be manageable within your budget.
It will be important for you to do some research online to find out their online reviews. It will be helpful for you to make your discussion after you have read their reviews, on Google, Yelp, BBB, or any other online review portal.
Remember all car title loan companies will have some negative reviews, or at least they should, but when you are looking at the reviews, look to see if the company replied to the client.
If you find that the company never replies to their complaints, then you can tell that they do not care about their clients, so it would be best not to go with them.
If you find that there are many negative reviews, that will be another good sign that the company will not be right for you.
Choose Established Title Loan Companies
With so many different options out there for you, another thing to look for is to find a company that has experience.
Some companies that have only been doing title loans for a couple of years, do not have the experience and the knowledge.
The large title loan companies have collection policies, so they will work with you if you are having difficulties making your monthly payments, the new companies might just want to repossess your car because they get nervous.
Experience can make a difference, the large companies can make adjustments and sometimes differ payments for you.
With small boutique title loan companies, the advantages are, that you will have a more intimate experience, and you will be talking to the same person when you are in the approval process.
With the small companies, they will know your name or be familiar with you when they are doing the collection call reminders.
You will not get this with the large title loan companies, but you will have more security with the large company, as they are more financially secure.
Finding The Right Title Loan Lender
There are much cheaper ways to get money, but they may not be available because of your credit, it is important to explore all avenues before choosing to get a car title loan.
With vehicle title loans, some companies can offer you the money the same day that you apply, or they can also offer to get you the money within 24 hours.
Getting same-day funding does make getting a title loan very attractive, but make sure that you have an exit strategy, so you always know in the worst-case scenario, how you are going to pay off this loan.
Finding the right title loan company does take some work, but the savings are worth the effort. In some cases, it is easy to get a car title loan, but if you choose the wrong company, they can be very difficult to get out of.
Use all of the resources that you have to make the best decision, and if you have to get a car title loan, then you must be very careful, and choose the right company.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes