Automobile title loan
Typically known as Small Emergency Loans, are short-term loans, which usually are allowed for no longer than a month. These loans have high interest rates, and are especially designed for those customers who need money only for a short period of time.
More briefly, these automobile title loans are generally borrowed on collateralizing the Title of the Automobile' of a borrower. Meaning, if in any case the loan is not re-paid in the specified time-span, the loan lender has the full authority to sell the automobile of the borrower to get his/her loan repayment. Most importantly, a lender lends an automobile title loan only when there is no other kind of loan taken on the same automobile.
Who Does Automobile Title Loan Lenders Target
Usually the automobile title loan lender's target customers includes Low-income individuals', Elderly People' People with bad credit', and Military associates. And to evade various protections and usury laws, the automobile title loan lenders wittily give attractive names to their loans, for instance Bad Credit, Bankruptcy, - No problem, we still give the loan! "Title Pawn', sales and leasebacks', or "motor vehicle equity lines of credit", etc.
In an effort to earn huge profits, automobile title loan lenders allow title loans mostly on exorbitant-digit interest rates, For instance, if the loan is allowed for an interest of 25% for 30 days or less, the interest will be accepted the same within 30 days. But if this period is exceeded, say for about one year, then the actual interest will go up to 300%.
Now wondering when an automobile title loan is a short-term loan, how can it be exceeded Well, the idea used here is, when the loan is not repaid within a month, the lender accepts the loan interest at the end of the month, and allows the debt to be rolled over' for another month.
Note - By law, the roll over' period of an automobile title loan can be renewed for six times at the maximum. But at the same time the interest rate may also go high.
Henceforth, no doubt a short-term automobile title loan is worth taking for a person in financial or credit crisis. But, the solution is also for a short term. If unable to pay on-time, then the effects can be devastating. You will end up paying high interest rate and at the same time may lose your automobile as well.
So, before getting an automobile title loan it's prudent to check on with the fair market retail value of the loans. This you can easily do by checking in NADA (National Automobile Dealers Association) or the Kelly Blue Book, where the actual and current value of automobile title loans will be given.