Why Car Title Loans Work Better Than Payday LoansFast Action Finance
There are times that you encounter unexpected or emergency expenses in life without the financial capability to handle things. More often than not, this turns out to be a costly experience particularly if you have saved little in your bank accounts. Studies show that a good percentage of people use payday loans to sort out their bills. The number of borrowers acquiring funds through auto title is just slightly lower than the number of payday borrowers. This begs the question regarding the type loan that works best. Here is a look at some of the things that can help you distinguish a payday loan from an auto title loan to be able to make the right choice when in need of emergency funds.
Auto title loan
Auto title loans have grown popular as the most effective way of raising fast cash. This is because all you need as a requirement to get the loan is an automobile. When you take your automobile to the lender, he will assess its value and determine the amount of money to give to you. This is based on your car’s value. The lender will give funds for a certain percentage of the value of your car. Before receiving the money, you have to give the lender your car title as collateral. This gives the lender the power to repossess your automobile in the event you fail to meet your financial obligations.
Why auto title loans?
Auto title loans work well when you do your homework before making any choice. You need to create a financial plan to help you clear the loan on time. You need an alternative such as auto title refinancing just in case thing go wrong. The most effective way of paying off an auto title loan is by making consistent extra payments. This goes a long way in reducing the principal (amount owed). When the principal is low, you will not feel the pinch of high interests. In addition, as you make the financial plan, you have to factor in other additional expenses that occur such as repossession and storage fees.
Auto title loan offers a bigger payout than a payday loan
Unlike a payday loan that offers a small amount of money, an auto title loan offers sufficient funds based on the value of your car. All you need to do is ensure that there is proper car evaluation as it helps the lender to determine what percentage of car value can be used to determine the amount of loan you get. As long you have a good financial plan to clear the loan, you can get a reasonable amount of money.
It is paramount to consult professionals before making any choice. This is because they are in a position to let you see the big picture. For instance, they can help you to come up with a financial strategy to reduce the effect of interest rates on the principal. Therefore, you can always feel free to work with financial agent for car title loans in Brampton to make loan repayment a manageable task.
What is a payday loan?
A payday loan is a financial funding that works on a short-term basis. After determining the exact amount of money that you need for use, you can write post-date check (usually personal) stating the amount you need. This is inclusive of a fee charged by the lender as a result of fund issuance. With advancement in technology, you do not have to do things the traditional way. You can simply fill the application form online. The lender will then offer you the loan for a particular period, which happens to be 14 days. When the term is over, you will be required to pay the lender the amount of money owed with an additional finance fee.
Extending the loan
When the loan is due and you are unable to clear it with the finance fee, you can work with the option of loan extension. In essence, when you decide to extend the loan, you have to write another post-dated check that has an additional fee. That means you are going to be charged more than you would have if you had cleared the loan at once.
High interest rates
Payday loans are short-term and as such, they have ridiculously high interest rates. That makes it a little harder for borrowers to pay off the loan on time. The worst part is that if you stay in a payday loan cycle, that involves extending loans, you may end up in a serious financial problem.
With these ideas in mind, you can now make the right choice when looking for a short-term financial solution to make things work. The most important thing to do while planning to apply for an auto title loan is looking for effective ways that help you clear the loan on time.