The dangers of using title loans
Debt is an inescapable fact in our lives and as we grow older, we end up having a lot of debts that we have a difficult time paying. There are a lot of ways that we can pay for our debts. A good way to pay debts is to get title loans. Title loans allows you to easily purchase the car that you want to buy by using vehicles as collaterals for the loan should you become incapacitated to the pay for the loan. This is the best way to get the funding without the need to see a bank loan officer. This is the reason why a lot of people prefer this particular type of loan.
While title loans are very helpful for people who want to acquire a particular property but do not have a lot of money to pay for it, it still comes with some repercussions. Perhaps the most common danger of using a title loan is the fact that it imposes high interest to the borrower compared to other types of loans. Moreover, title loans also require the borrower to repay the loan within a month when the loan was first obtained from the lender.
Another danger of getting title loan is that your collateral has a bigger value compared to the amount that you have borrowed. For instance, if you were allowed to borrow $1,500 and were not able to pay within a month’s time, then your car which is worth more than $1,500 will be seized by the lender the fact that you were unable to pay for the debt. Due this disadvantage, you may be better off selling your car than using it as collateral for a title loan. However, if you do not want to sell your car to raise funds, then it is important that you are responsible enough to pay for your dues diligently otherwise risk loosing your car to the lender.
To ensure loan repayment, the lender usually requires the borrower to have a stable job before the loan application will be approved. However, the problem with today is that there are a lot of people who have lost their jobs and getting a title loan will be impossible if they cannot show proofs about having a stable job.
What’s worst with this particular type of loan is that if you cannot pay, not only will your collateral be seized but you will also end up paying high bank fees and even higher interest rates. Thus, it is very important that you ponder on first if you really want to get this particular loan.