Senin, 07 Maret 2011

How To Decide Whether Auto Title Loans Are Right For You

Having an urgent need of money, and not having any resource to dip into is a common thing and this is where auto title loans come in. While there are times when the emergency can wait till the next paycheck, there are cases where it's a do-or-die situation. A cash loan for car title becomes indispensable at this point, since you get quick and easy access to cash, to take care of whatever financial need that you have. Basically, an car title loan dips into the equity you have in your car. Your car title is used as collateral, hence the subsequent naming of these kinds of loans.

The prerequisite to getting approved is having a car that you have fully paid off. As one would assume, the amount you are given will hardly reach the car's worth (its mostly 50% the market value). This is because the lenders cannot risk giving that much. Besides, it puts more pressure on the borrower to make the repayments, since they will have more to lose in the end. The most outstanding advantage is that you get money fast. The approval period is unbelievably short, and you are given money to take care of whatever need, you have. If you are sure of timely repayment, an auto title loan is a good idea. You don't get your credit checked, which in other words means that you can get approved so long as you own a car, and have a regular source of income.

Sadly, the bad that comes with auto title loans greatly surpasses the good. The repayment period is short, averaging a period of thirty days. At the end of the term, the borrower is expected to repay the amount in full, together with the interest earned. The rates themselves are severely unfriendly, ranging up to a few hundred points when calculated on an annual basis. If unable to repay your auto title loans, the car can be repossessed by the lender who fully obtains it as it was the collateral, or a rollover option is offered. The latter only postpones the problem, and adds penalties to the equation as well. If you are already immersed in debt, an auto title loan will simply be a fuel to the fire.

Regulations on auto title loans differ from one jurisdiction to the next, and it's good to be aware of the legal aspect of it, to know what your legally mandated rights are.

Sometimes, when there is no other option left, you may think of applying for auto title loans. While it is not a certainty that an auto title loan will come with huge interest rates, it is undoubtedly the norm. And this is why you should do some research prior to applying.

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