Why Are People Turning To Car Title Loans These Days?Fast Action Finance
Car title loans continue to increase in popularity over the years, particularly after the economic meltdown that hit the globe a few years ago. It is not too difficult to see why this kind of loan continues to gain popularity. Car title loans are safer than the payday loans. This type of loan allows you to obtain thousands of dollars in less than 24 hours, without having to depend on your credit rating. Many people who are faced with rigid time constraints or ugly credit histories have the benefit of turning towards this type of loan. The question that arises is how best can you use the car title loan? Should it be used for small business expenses or personal expenses, or for everyday spending or unplanned emergencies?
There is not much of current data available in the market on car title lending. Nevertheless, a survey conducted in 2007 on a few states reveals the main reason why consumers took car title loans. The results showed that title loans were taken and used mainly for personal uses – for everyday spending and emergencies.
â€¢ 29.55% used the loan in payment of missed paycheck or delay of an expected employment income.
â€¢ 29.18% used their car title loan for car repairs and maintenance.
â€¢ 28.90% used the loan to help with the payment of rent or mortgage.
â€¢ 19.33% used the loan to pay high utility bills that they owed.
â€¢ 14.87% used the loan to settle medical emergencies.
â€¢ 8.74% used the loan for other expenses.
Critics of such surveys argue they are not accurate, although they provide the perfect starting point. Borrowers may fail to report the actual reasons that they are taking the loans. Some people may take out the loans for something embarrassing, such as gambling losses but they choose to report they use the loan to cater for medical emergencies or payment of utility bills.
Small business expenses
A survey shows that 1 out of every 5 people who receive the car title loans are self-employed. According to title lenders, borrowers use these loans to finance their small businesses. Nevertheless, there is some controversy over the truth of such surveys because there have been few surveys that have been conducted. Furthermore, the surveys that have been conducted have very unspecified data.
The surveyed persons may report the loan was taken for both personal and business use. For example a loan could be taken to buy a truck that might be used as a second family car and for the business. According to a single survey conducted in Texas 25.71% reported that they were taking up a car title loan for part business expenses after it was clarified that paying for gasoline to work amounted to personal expenses.
Car title loans offer freedom
People are in unique circumstances with different priorities. Therefore, there are many reasons why individuals take out title loans. Title loans are usually used as a last resort to help keep people afloat particularly when they experience a financial problem. There are many expenses that are important to ignore- expenditures that are often not taken into account by the system.
The car title loans grant people the freedom they need to get the money that they require quickly and without a hassle or questions. If you need money fast, but a bad credit score prevents you from accessing the traditional short-term loans, taking out a title loan is liberating. You stand to get some money with minimal income verification and no credit check.
How title loans work
In a title loan, the lender evaluates the price of the vehicle and then gives a loan based on what they think the vehicle is worth. The lender then holds on to the title of the vehicle until the loan is repaid. Nevertheless, the loan is not similar to when you purchased the car. This type of loan is short-term with a high rate of interest. If you fail to pay back the money as stipulated in the agreement, you have essentially sold of your vehicle to the lender by default.
The car title loan is based on the equity build up in the borrowerâ€™s vehicle. You will be expected to own your vehicle outright. If you owe money on a car loan, the title on the vehicle is still with the bank. Therefore, you cannot use the vehicle as collateral or security for a loan. The other requirements include proof of your employment or business income, proof of residence and a minimum age.
Read the fine and large print
As you drive your vehicle over to the lender to get the money that you need may sound simple enough. However, before you sign the contract it is advisable to know what you are committing yourself to. Consider how the interest rate is calculated, the penalties for nonpayment or late payments and the mitigation rules whenever you apply for vehicle title loans in Brampton.