While not as common as conventional loans or even payday loans, car title loans have become a more popular method of accessing cash when all other forms of borrowing have proved futile. A car title loan is much different than more common forms of borrowing in that a vehicle is used as collateral. As a result of having collateral, there is no need for much of the paperwork involved in a home equity loan, for example. With a conventional loan, a borrower’s credit history, employment history, and background must be thoroughly examined by the lender. The lender then makes a decision on whether or not the person is a qualified borrower.
A title loan does not require a background check or a credit check, thus those who have a suspect credit history can still borrow against the value of their vehicle. The owner of the vehicle must have a clear title and prove his or her identity. At Embassy Loans in Florida, potential borrowers bring in their title, a form of photo identification, and something that proves where they live. In a matter of hours, the loan can be processed and a borrower can have access to his or her money.
Car title loans are typically in the range of $1,000 to $2,000 and are used in emergency situations. An unexpected medical expense, for example, comes up and needs paid or a job lay off has caused bills to pile up. Whatever the circumstance, a car title loan can help and may be the only choice for fast cash.
A vehicle title loan, like any loan, comes with a price however.The longer you keep it, the more interest you pay. Borrowers should pay off a loan as quickly as possible. The normal way, of course, is to re-organize your monthly budget so that you can allocate more toward paying the title loan. Some times, that is easier said than done, but by far, that is the most desirable method.
A second option is to borrow enough from someone else to payoff the title loan, usually from friends or family. While this can be tempting, and it will save you a lot of interest, do consider what will happen if there is another bump in the road and you are late on your payments. Many people have lost friends and even family because of the lack of ability to pay back a loan.
A third option, while potentially painful, may be the best choice of all; find another income or part time job. Working a few evenings or weekends to pickup some spare cash can get that loan paid off fast and without squeezing your other spending.