If you need cash quickly and are prepared to repay them, car title loans are an easy way to access money in a hurry. Before applying for one, though, you should make sure you have a good understanding of the risks and rewards involved.
Advantages of Using Car Title Loans
- Have you ever tried to get a loan from a bank? Taking out a mortgage, for example, can take several weeks. Obtaining a car titleloan can take as little as an hour. At Embassy Loans, potential borrowers can often get their hands on much-needed cash in a day. The process is quick and easy.
- Do you have poor credit? Having a bad credit score and poor payment history means that it will be difficult for you to obtain a conventional loan. If you own a car, however, you can access a car title loan. Since the vehicle is collateral, there is no need for a credit check. The absence of a credit check also speeds up the loan process.
- Even though you have a loan on the title to your vehicle, you still get to use it. You maintain possession and use of the vehicle while you repay the loan. The lender keeps a set of keys and the title until the loan is repaid.
Disadvantages of Using Car Title Loans
- The biggest disadvantage of a car title loan is repossession. If a borrower fails to repay, a lender has the right to take possession of the vehicle. When the lender recovers the car or truck, they will then resell it to make up for any losses. Borrowers are only able to borrow up to 50 percent of the vehicle’s value. This helps the lender in making up for the loss in the case of repossession.
- Car title loans are short-term. The initial interest rates are not outrageous, but if you do not repay the loan in the given amount of time those rates change. Often, a borrower will not have the loan repaid within the agreed repayment period. The loan can be extended, but the additional interest can add up. This is why borrowers are encouraged to repay car title loans as quickly as possible.
If you have a repayment plan ready, you can use a car title loan to your benefit. Do some research and make sure you have a solid understanding of the loan process as well as repayment and reap the rewards of a car title loan.