How Can I Pay Off My Car Title Loan?Fast Action Finance
Over the last decade, the financial industry has expanded to include all sorts of financial options for consumers. From home equity loans to subprime mortgages and payday loans, thereâ€™s something for everyone. But even with so many options, itâ€™s easy for one to flash their financials down the drain if they are not careful. One of those financial options that can dent your financials is known as car title loans.
Car title loans are fairly new in the market and if not handled well, they can be harmful to oneâ€™s finances. Although they are not as popular as payday loans and home equity loans, they are equally damaging. Consider a scenario where you need $1000. Would pay $2100 to borrow that much? Probably not, because it does not make economic sense. The truth is thatâ€™s what people end up doing sometimes. Below, we take a look at some of the reasons for taking car title loans, and most importantly, how one can pay off a car title loan.
What are car title loans?
You have probably read an article describing what car title loans are by the time you are reading this. If thatâ€™s the case, you know that a car title loan is not similar to a car loan, but it is actually a kind of collateral lean. Simply put, a car title is used as collateral for these kinds of loans.
Obviously, most people tend to think that the only danger of these loans is the possibility of losing their cars. Period. No one thinks about anything else outside of that. For instance, people will not stop to think about their means of transportation after losing the car to the lender. Public transport may sound like a good solution. But it will not offer as much convenience as a private car.
Worse still, failing to make timely payments of your loan may also dent your credit record if your lender reports your loan to credit agencies. This in turn makes it difficult to access loans in the future.
Even when the loan is paid off, the lender still stands to receive high interest which serves as a penalty for late payments. Some borrowers, as a result of defaulting on payments, may end up paying 300% APR or even more. So how can you protect yourself from such ludicrous rates? Read on to find out what your payment options are if you already have one.
What are the payment options?
On to the most important question of all: what happens if you already have a title loan? Is there hope of repaying the money in time? Of course, there is hope. And of course you can repay your loan before the due date. The best option will depend on what your current situation though.
For those with a good credit score, there are several options. The first option is known as a consolidation loan. This comes at lower interest rates and has a longer repayment period. Be sure to work with a reputable lender such as a bank or local credit union.
Another method you can use is to alter your monthly budget in such a way that more funds go towards repaying the loan. This way, you might end up paying the loan faster, hence limiting the amount of interest paid on the loan. Also, look for alternative ways to reduce the expenses and save money.
If you need more time to pay off the loan, you can ask your lender to extend the repayment period. While some lenders may not allow this, others will: hence the need to ensure that the lender you settle for gives room for extension of the repayment period.
In case any of the above doesnâ€™t work, you can downgrade your vehicle. Obviously not the best solution given its complexity, but it will get you somewhere. And if you arenâ€™t able to reduce your monthly expenses, this might be the last resort. However, you need to communicate with the lender if you decide to take this route.
Are you ready to take up collateral loans?
The reasons for taking out such a Toronto collateral loan are completely understandable. After all, desperate situations indeed call for desperate measures. And while collateral loans are not a desperate measure, they can help get you out of your crisis. Mortgage payments, school fees, hospital bills, monthly bank loan payments, home renovation and startup capital for your business are some of the situations where car title loans can help.
However, itâ€™s important to remember to borrow only as much as you can comfortably pay to avoid the exorbitant rates that come with late payments. To do this, you will need to access your financial situation. Consider the value of the assets you own, how much income you earn each month and how much you can afford to pay each month without minimizing your budget unreasonably.