By taking title loan using their automobiles as collateral, owners can get cash when they want from title loan lenders.
Taking a loan against an asset like home, bonds, or something valuable as collateral is common practice but many people also do use their car as one when they’re stuck in dire financial emergencies requiring them to get immediate cash without having time even for selling off their car. A title loan works to provide cash assistance in lieu of a car as collateral. What do Smyrna title loan companies do? Essentially, they help people by offering special and short-term loans without buying their cars. Qualifying for title loans is as easy as the process used for payday or cash advance loans. Repayment for such loans is usually due in exactly a month from taking it. Want to know more about title loans and what risk potential they hold? Read on.
What It’s About?
A car or auto title loan is secured loan where car owners permit their lender to place lien on their car. They have to surrender their vehicle’s title hard copy temporarily which they get back when they repay the loan. Short-term, high interest and repossession by lender on payment default are part of the title loan concept.
Repaying a car title-loan means the owner who’s borrowed the money has to pay back the original amount added up to interest and different fees charged by the lender. Typically a lender included processing fee, origination fee as well as lien and document fee. If the borrower defaults on payment he could also add late fees to the bundle. Do ensure that a lender doesn’t charge repossession fee which is not a legal practice. Some lenders also offer that borrowers can pay up only the interest amount for certain period. While car owners who find themselves unable to pay up the high repayment amount gladly take up the option, this move increases the duration of loan and places more burden on them.
What are the Risk Factors?
Firstly, while taking a title loan sounds easy and cool it does have certain risks involved. Nonpayment can take legal matters to repossession of the car put on as collateral and many other financial troubles. So how does one ward off attempts of predatory lending by a Smyrna title loan company? Check credentials. Understand that while there may be easy processing with little pre-loan verification and no credit checking the post-loan scenario could be difficult to handle if at all repayment deal goes awry for some reason. The interest rate charged by title-loan lenders is higher than credit-card lenders. The average APR that’s charged could be as high as 250-300%.
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