In the past few years, the car title loan has become a more popular form of borrowing among those looking for extra funds for a variety of reasons. A car title loan is one that is secured by the title to a vehicle that a borrower owns. It is somewhat different than more conventional loans offered by banks and other financial institutions. There are a number of differences that borrowers should be aware of if they are to use a car title loan responsibly.
Acquiring an Auto Title Loan
In order to obtain a car title loan, a borrower must possess a vehicle and its title and that title must be free of any liens. That means that the car or truck must be completely paid off. If this is the case, the borrower will fill out an application to begin the process. Embassy Loans, a leading consumer finance company in Florida, will verify a person’s identity, residency, and check to make sure the title and the vehicle match. Once complete, the borrower signs the loan agreement and receives the funds. Car title loans are processed within an hour and, oftentimes, much faster.
Understand The Terms Of The Loan
Before signing the title loan agreement, make sure you understand the terms of the loan, including repayment. You should be aware of the interest rate, which is normally higher than that of a conventional loan. Repayment terms can vary. You should also make sure that there is no prepayment penalty should you pay the loan off early. Paying the loan off early is in your best interest so that you save on interest payments.
Have A Plan To Repay The Loan
You should have a plan to repay the loan before you apply. There are title loan companies, like Embassy Loans, that may not require any proof of an income source or an employment verification. If you do not have a steady income source, be sure you have a plan to pay off the loan. Otherwise, the lender is going to take possession of your vehicle when you fail to pay.
Consider Other Options First
Before deciding to take out a car title loan, think about alternative sources of funds. You may want to consider a traditional loan with a lower interest rate, if you think you can qualify. Take a look at a credit card cash advance, borrowing from friends or family, or even taking items to a pawn shop. Some of those options may work out better for your situation.