Car title loans are not exactly the most conventional method of loaning money but they could be a viable option for you if your circumstances prevent you from going down a more traditional lending route. Perhaps you have defaulted on repayments in the past and you have a bad credit score which stops you from being considered an eligible candidate for a loan, overdraft or credit card. If that’s the case, then car title loans can start to sound attractive.
Afterall, opting to take one out can be done with no background or credit checks having to be conducted and an absolute minimum amount of ID verification. Perfect right? Not necessarily. In a similar manner to payday loans, car title loans can often conclude with the borrower spiralling deeper and deeper into debt. Is this a consequence of title loans being a shady operation? Not exactly.
So many people want cash fast and their only consideration is how to get their hands on money quickly and as such, they don’t pay any mind to the small print and the consequences and terms of taking that money, and they do not plan for how they are going to repay it going forward. These are dangerous pitfalls that are all too common. This article will suggest how you can use title loans for a financial boost without losing your car or spiralling into debt.
Understand All of the Terms and Conditions
This cannot be stressed enough. Do not sign on the dotted line under any circumstances until you know exactly what you are signing up for, and all of the potential consequences of taking out the title loan. This means familiarising yourself with the interest rates (understanding how is calculated, the specific percentage of interest associated with the loan, and the time periods for the interest), understanding the penalty clauses for late payments, and any rules surrounding mitigation.
Ensure That You Can Afford to Repay it
Did you know that one in five people who take out car title loans actually wind up losing their car? Ensure that you don’t fall into that demographic by checking that you can actually afford repayments on the loan before you sign up to it. If you expect that you will still be in the red when the first repayment is due then it’s time to either reassess your budget and see if there are any upcoming expenses that you can reduce or push back.
You can also look to see if there are other options for making quick money that will not result in you losing your car if you miss a payment. If you lose your source of transportation and are unable to make it into work, you will find yourself in a situation that is far worse. Cash flow forecasting isn’t something that is just limited to businesses in its usefulness of application. You don’t want to spend years rebuilding your credit. Instead, you should develop a financial plan for your own incomings and outgoings.
Shop Around for The Best Deal
Before taking out any kind of loan it is imperative that you do your research. This means comparing and contrasting the offers and interest rates of a few companies before you take the leap and decide to go with one. It also means conducting background research on the company you opt for to ensure that everything is above board.
You should check reviews from past customers, and ensure that the lender is certified. A simple Google search can aid you in finding a suitable title loan provider in your area. For example, if you are based in London, you can just conduct a search for title loans near London.
Review if You Have Exhausted Other Options First
Are you certain that taking out a title loan is the best option for you? If you are concerned that you have a bad or non existent credit rating then all hope is not necessarily lost. There are still lenders for small value bank loans and credit cards who will consider even those individuals who have a bad track record for keeping up repayments.
Perhaps the interest rates in these instances is a little higher than the general average but you can bet your bottom dollar that those interest rates are still significantly lower than the ones which are tied to title loans.
Similarly, you could consider pawning items for cash. You don’t have to go into extremities and start pawning your furniture and your television set but perhaps you have something in your household that is just collecting dust when it could be collecting cash.
For example, do you have any old jewelry that you know has a decent financial value but you never wear? Perhaps you have a qod collection of DVDs and books that you could sell. Pawning items isn’t restricted to taking things to the traditional pawn shop, there are also websites through which you can sell your jewelry and other specific items and have the courier to show up at your house to collect them for maximum convenience!
Check the Details Around Your Car
Typically, taking out a title loan requires that you own your car. If you are still in the process of repaying the supplier or your car is on credit then you will not be able to use it as collateral for a loan. If you try, you may get into more trouble than the financial debt that you are dealing with presently.