How Title Loan Works
When one needs money or are cash stranded, especially for emergencies, one tends to turn to the next available source of help to meet that need.
13:26 24 February 2020
It is totally normal and humane. But, if you are about to take any type of loan, you should be well informed and ask questions exhaustively. Do not leave a stone unturned.
As said earlier, online title loan or car loan is a type of loan that comes easily, all you just need is to have a vehicle to lay down as collateral. When that is done, you can get your loan at an amazingly fast speed of fifteen to forty-five minutes. It is surprising, right?
Because of the nature of title loans, it is advisable to take it only for exceptional cases like health emergencies, payment of school fees, etc. You should never contemplate taking an online title loan for a business that will take more than two weeks to yield interest. If you ask me, never take title loan for any type of business.
Before you think of taking that loan and risking a whole lot of things, you should know how a title loan works. Underlisted is how it works:
- The borrower receives title loan when he gives the vehicle title to the lender: this means that the moment a person takes title loan, he is no longer the full owner of the vehicle that is used as collateral. He transfers the ownership of the vehicle in question to the lender until he is able to pay back and with the agreed interest.
- Agreement on the interest: before title loan can be successfully acquired, there has to be an agreement between the lender and the borrower which is usually higher than the actual amount borrowed. This is mostly around three hundred percentage interest (300%)
- A title loan is independent of your credit score: this might seem like the only advantage to title loan after the fact that it comes with no stress. Most lenders would not consider your credit record since there is collateral to cover for more than what you borrowed.
- You can only borrow up to fifty percent of your collateral value: when you want to take a title loan, you should bear it in mind that you will only be allowed to borrow between twenty-five and fifty percent of your collateral value. This is very risky if you do not pay back at the due date.
- You have a short period of time to pay back: it is like a payday loan, that is you have about thirty days to pay back the lender with the interest. This means that you should not try title loan if your paycheck will not be able to pay it back in full.
- The lender takes full ownership of your vehicle if there's a breach in the agreement: you are supposed to pay bay on or before the agreed date. If you fail to take back at the exact day, the lender has the right to take the ownership of your car. In a situation like this, the lender takes all the proceedings made from the sale of the vehicle and you do not have any share in it. Except for some few states that mandate the lender to take the equivalent share of his money and interest while you get the balance.
If you would like to know more about title loans and how you can access them, please check out this link: How do title loans work?