What Car Title Loan Borrowers Need To Pay Attention ToFast Action Finance SEO
Unfortunately, most borrowers apply for a loan before fully understanding what they are getting themselves into. This can happen to anyone especially when pressed for time to get funds. Car title loans are one of the best consumers financing in the market that guarantee quick loans. You only need to own a fully paid for car and a national ID. You can approach a lender with the title of your car and get your loan processed in a matter of days. If you have a family or business emergency that requires instant cash, then you can apply for a car title loan.
Even when pressed for time, you should always take the time to understand what you are signing for and the terms of any loan you apply for. Car title loans do not need too much processing time since the lender uses your car title as collateral.
As a borrower, there are certain things you need to pay attention to before accepting a deal from the lender. Some people have been known to swallow more than they can chew after hurriedly signing off on loans that end up being more than they can handle. This article will highlight key areas you need to pay attention to and demand for answers from lenders before accepting any deal.
The total cost of your loan
You should always have the definite numbers you are dealing with regarding your loan. When you approach a lender, they first of all have to work out your loan limit and this is determined by the market value of your vehicle. After they work out a loan limit, they then calculate the interest depending on the loan term.
The loan term is how long it will take you to repay your loan. Most car title loans take 30 days to be repaid but you should never shy away from negotiating with your lender for a longer loan term. You need to understand that the longer your loan term is, the higher your interest rate will be. You can also ask your lender to disclose the percentage of the APR they use to calculate the interest on your loan. You can use this information to compare from different lenders to get the best deal.
Look for additional costs
This is where most borrowers go wrong. They simply don’t take the time to go through their paperwork to check for hidden charges that may be involved. You can always ask your lender to explain certain paragraphs in your agreement if you don’t fully understand the terms used.
If you have a lawyer, you can ask him to explain the loan terms and let you know of any hidden charges. These hidden charges help you to know how much you will spend overall on your loan. You can then use this information to decide whether applying for a loan is worth it or not. For example, in a car title loan a lender may require you to get a breakdown insurance before they can sign off on the loan. This means you have to incur additional costs.
Negative ramifications of the loan
You need to sit down and think of the negative upshots that may come about by applying for a loan. You should always think of what you stand to lose in the event you are unable to pay for the loan. For a car title loan, you need to understand that by signing off the lien you give the lender the right to repossess your car and sell it to recover their money.
The good news is that there are ways you can avoid this from happening when you don’t have the cash to pay off your debt. You can choose to downgrade your car to pay off your loan. How does this work?
For example, if your car’s market value is $8,000 and you have a car title loan of $4,000, you can look for a buyer willing to pay you the $8,000 and sell your car. You can then use the cash to pay off your loan and use the balance to buy another car of a lesser value. However, you need to make the lender aware of your intentions since they have your car title.
Take time to think of your decision
You may sit and conclude that going for a car title loan is the best solution you have for the moment but, it never hurts to take some time to think over your decision. Your family and friends play a big role when it comes to borrowing of loans. They can help with the payments in case something unfortunate happens. You can sometimes find out that these are the same people who will come to your rescue when you are unable to repay your debts. In the meantime, you will have already lost a sizeable amount of money.