Pay Off Your Car Title Loan To Avoid Future Financial Hiccups!Fast Action Finance
From payday loans, to home equity loans, to subprime mortgages, people these days have a wide array of financial assistance products they can opt for. Some of these financial products have the potential to drag the borrowerâ€™s finances down if he or she becomes careless in their repayment. One type of a loan product however that hasnâ€™t been much publicized but that also has the potential to harm the borrowerâ€™s finances if not careful is the car title loan. This loan product is not as common as the other short-term financial products. For a borrower to avoid finding himself in dire financial problems, it is recommended that he maintains a proper repayment schedule as failing to do so leads to heavy fines, if not a bad credit score.
Are car title loans some kind of financial products used for buying new vehicles?
As a matter of fact, car title loans are some kinds of financial products that are availed after using the car as collateral to borrow money against. So they are not some types of loans that are used to buy new cars. In fact, they are very similar to home equity loans in that they are offered to people needing quick cash for urgent financial needs. To get these kinds of financial products, the borrower must surrender his car title to a lender who then keeps it until the full amount of loan has been paid back. Apart from the car title, the borrower also has to provide a copy of the car keys to the lender so that he can easily repossess the vehicle in case the loaned money is not paid back.
Options for paying off car title loans
There are different ways to pay off a car title loan, with the best option depending on the specific borrowerâ€™s situation. Borrowers with good credit scores certainly have better repayment options than those with a poor credit reports. Here are some of the common car title loans repaying options that can be opted for.
Consolidating all loans to replace an existing title loan
People with a good credit score have a better chance of getting a consolidation loan plan compared to those with poor credit scores. But whichever the case, borrowers should make sure to work with a reputable financial service provider, for example a local bank or credit union, to get this kind of a financial assistance.
Revamping the budget
People wanting to quickly pay off their car title loan should revamp their budgets so as to allocate more financial resources toward paying off the loan each month. This way, they could pay off their loan faster and hopefully limit the amount of interest that must be paid. To successfully revamp a budget, the borrower must create a realistic financial plan that covers all his or her expenses. This done, the borrower should then start looking for realistic ways to reduce expenses and save money. While this might seem a difficult thing at first, the results are better than if it wasnâ€™t done. Borrowers who have done this are usually surprised by how easy it becomes to pay off their car title loans.
Downgrading the vehicle
If the above listed car title loan paying off options canâ€™t work for a specific borrower, then he should consider downgrading his vehicle. Obviously, car downgrading is a complicated step to take when it comes to paying off a car title loan for a number of reasons. But if a borrower is unable to meet his normal monthly financial obligations, downgrading the vehicle is probably the best loan repayment option. Letâ€™s say the car used as a collateral against the borrowed amount was bought new and which is now valued at around $12 500. And due to a number of different reasons, he is now unable to pay back a $2 500 loan he took using the car as collateral. If he sells the car for $12 500, and thereafter acquires a used vehicle for around $5 000, then he would have more than enough cash to comfortably pay off the title loan plus any extra fees or charges.
The complication with this option is that the lender normally has the car title and might be unwilling to let go of it until the full amount of the loan is paid back. If this is the loan repayment path he has chosen to take, the borrower will need to plead with the lender to release the car title so as to sell off the vehicle. The borrower might agree to it or disagree for any number of reasons.
Is there a danger to not paying off the provided loan amount?
Like in any other short-term loan products, car title loans must be paid back in full when they fall due. Failure to do so simply leads to the car being repossessed or paying very exorbitant fines due to late payments, or having a derogatory mark added to the borrowerâ€™s credit report. If this does happens, then it becomes very hard for the borrower in the future to be availed with other loan products.