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Title loans
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Theoretically speaking Title loans are the short-term loans that are secured by the clear title to your vehicle or other titled personal property. As a matter of fact this is a 30-day renewable loan where someone else holds the title and the keys but you keep the vehicle. In an ideal scenario you can borrow up to $2,500 on your car title in which the entire process is fast and easy which usually takes about 20 minutes. However, fact remained that methods differ from company to company, and the terms may also differ. It is advisable to shop around to find the best deals.
There is no denying that companies use car titles to secure the loans. By following this route, if you default on the loan, the lender gets your car. Point to be noted in this regard is that most title lenders will only make the loan if you do not owe anything else on the car for people seeking short-term loans. Believe it or not Title loans are offered by companies for different vehicles including cars, trucks, vans, motorcycles, boats and others. In simple terms an important criterion is that the borrower should have clear title of the vehicle. It is worthwhile remembering that Title loans are usually set up for a period of 30 days. If experts are to be believed at the end of that corresponding period of time you can either pay off the loan or you have the option to pay the minimum interest and extend your loan for another 30 days. There is no hiding the fact that it makes you to extend as many times as you need to extend. On the other side of the coin when the loan comes due, you may pay only the interest to extend the loan, or you may pay off the loan, or pay interest plus any amount of principal to reduce your next payment. It is worth mentioning in this regard that Title loan is very famous among the residents of the UK as a loan for a short term. Furthermore add to this the instantaneous approval that borrowers can have, and title loans form the best available option. Theoretically speaking a title loan is a secured loan with the title to the automobile serving as the collateral. In other word the use of automobile as collateral is not limited to title loans itself. In simple terms m0any lenders accept the automobile as collateral to back the loan repayment. However, fact remained that home reigns supreme in the preferred list of collaterals. On the other hand vehicle or automobile, which is considered a secondary asset in secured loans, is used specifically to back title loan repayments. More often than not the loan provider retains the title to the vehicle and not the vehicle itself. Because of this simple reason the borrower thus has the freedom to use the vehicle in the manner he chooses, provided efforts are made continuously to keep the vehicle in good condition. In an ideal scenario a basic prerequisite for the loan is that the borrower must have a clear title to the loan. In addition the borrower will be required to provide documents proving the ownership of the automobile at the time of approval of loans. On the other hand in regular loans, borrowers have to wait for several days for the loan to be approved. There is no denying that Title loans are different. Believe it or not within 30 to 45 minutes of the application, you can find your title loan application fully processed. Thats, title loans are also used as instant loans. If experts are to be believed borrowers who are wearied of the large number of refusals will find title loans different. It is worth mentioning in this regard that no credit check is required for the approval of Title Loans. As a matter of fact bad credit people will find these loans especially helpful because it is only in this loan that they will not be treated on dissimilar terms. Furthermore it is worthwhile remembering that bad credit scores owing to County Court Judgements, Individual Voluntary Arrangement, etc. do not count much in the approval process. Believe it or not Title loans have a sizable positive effect on the credit status of the borrower. In an ideal scenario for approval of title loans, a borrower needs to present his/her pay stub, four personal references, and a verifiable address proof. In simple terms as soon as these documents are presented, the loan can be sanctioned for use.
As is mentioned already, Title loans is a short-term loan. In addition the term of repayment may be about a month. As is pretty much the case with other short-term loans, the rate of interest chargeable is very high. In addition the annual rate percentage counts up to 300% - 900%. In other word this is an expensively high rate of interest. Point to be noted in this regard is that inability to pay the title loan in the month it is due, will require payment along with interest. On the other hand in the subsequent month, the borrower will have to pay double the amount that was actually due, plus the interest for the first month. This is because of the simple reason that interest in the second month costs equal to the actual amount. There is no denying that there is a fear of being trapped in title loans because of such an expensive rate of interest. For instance, it is worthwhile remembering that if the borrower fails to pay the title loan in the specified repayment period and the following months repayment burden doubles, the borrower will choose to repay only the interest. This clearly emphasizes the point that the principal is again carried over to the next month. Once again, it is worth noting that the borrower will accrue an interest equal to the principal. As a matter of fact this becomes a vicious cycle, making it difficult for borrower to extricate him/her out of the quagmire. Other Articles |
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