Auto title loans, or car title loans, have earned a bad rap due to high interest rates and the possibility of car repossession due to payment defaults. While these concerns are valid and may even make this type of loan sound like a bad idea, the truth is that auto title loans are just like any other loan product with its set of advantages and disadvantages. If you know how to make this loan product work for you, then you need to worry about losing your car and enjoy its benefits.
Auto title loans may have relatively high interest rates compared to your regular secured loans, but this loan product does answer a very special need. It is one of the best loan options out there for people who need money really fast, since approval is almost instantaneous. They are also a great option for people with poor credit scores, since they often do not VCP-510 require credit checks. In the end, compromising on interest rates may be the way to go, especially if you use this loan the smart way so as to maximize its financial benefits and minimize the negatives.
To help you make the most of your auto title loan, here are some tips for you:
1. Borrow money only when you really NEED it – This advice goes for ANY type of loan. Whatever loan product you get, you’ll end up having to pay for interest. So do without if you only want money for non-essentials. Instead, borrow money for real needs that require you to get money fast, such as medical emergencies.
2. Get only the minimum amount you needÂ – Even if your vehicle’s value entitles you to a pretty nice sum of money, apply only for the minimum amount you need. 200-101 As mentioned above, you’ll have to pay interest on every dollar you borrow, so borrow as little as you can.
3. Pay your dues on time – There’s nothing like late payments to set you back financially. Break the habit that has landed you with a poor credit history and pay your dues on time. This will ensure that you don’t end up bloating the cost of the loan due to late fees and ballooning interest. In fact, if you make an EARLY payment, some car titles loans will actually recompute your interest rate to reflect the early date, saving you money on interest. This is one of the secrets of car title loans people usually don’t take advantage of.
4. Resist making interest-only payments – One of the good things about auto title loans is that they allow interest-only payments, so that you don’t end up getting penalized with a late fee when you don’t have the money to pay for the entire amount when it’s due. However, doing so will mean that the cost of your loan goes up in the end since you pay more on interest each time you do this. If you have the money to pay your dues, then make sure you do so. Make interest-only payments when you absolutely have no choice.
5. Know the law – Unfortunately there are lenders out there that will rip you off without any hesitation. Protect yourself from title loan scams by reading the fine print and making sure that all is in accordance with the law. If anything seems amiss, don’t sign anything unless you want to get saddled with crazy interest rates, or worse, have your car repossessed.
Jessica Moore is a professional blogger that provides personal finance advice. She writes for TitleBucks, a leading title loan company.
Image Credit: Images of Money