The Benefits And Drawbacks Of Title LoansFast Action Finance
Title loans are loans issued using a vehicle as the collateral. Also known as car title loans, they have a short term and come with higher interest rates. However, they’re also issued without checking the credit history of the debtor and are easier to avail.
The biggest advantage of seeking a title loan is that no lengthy credit history checks will be conducted so even if one has a bad credit report, it won’t affect issuance. Lenders will only take a look at the vehicle to see if it’s worth the amount one wants to borrow.
Most title loans are issued within a the same day, couple of days or a week at the most.
Another benefit is that debtors get to keep their collateral and use it during the loan period.
Some Title Loan periods extend to only about a month so debtors have a very short term to repay the debt. Others extend them for a year or sometuimes more. Be sure to ask the lender what period they put the loan over.
The interest rate is higher which can affect the amount to be paid back.
If a debtor cannot repay the loan the lender will try and work out a repayment plan. If the borrower offers to surrender the vehicle to repay the loan any excess received by the lender when selling it, after related costs are paid, will be returned to the debtor.