Using Title Loans Correctly: Management Tips For Consumers
With most households in America owning at least one, and often two or more vehicles, finding a way to use the value of their equity to obtain needed funds can be a logical step to take. One of the most easiest methods of doing this is with a title loan. Before taking out a title loan, however, it is important for consumers to know how they work and proactive management tips to make sure the experience is a positive one.
Carefully examine the interest and terms
When considering a title loan, prospective borrowers are encouraged to take the time to read over all the terms and make sure they understand each one fully. Title loans typically charge a higher interest rate than other forms of credit, so it is important to make sure you know the total cost of the loan, instead of focusing solely on the amount of each payment.
Reduce fees by choosing a title loan without added features
Some title loans require borrowers to also purchase added features, like roadside assistance or a vehicle warranty. When the purchase of added features is required, their cost will be added to the finance charges, which then increases the cost of borrowing. Opting for a title loan that does not require any added features will make the loan less expensive to repay.
Avoid racking up huge debts with rollovers
Most title loans give borrowers an option to roll the loan over into a new loan at the end of the finance period, instead of repaying the entire amount plus interest, as originally agreed. While doing this can seem appealing to a cash-strapped borrower, it can easily lead to a situation where the amount of the interest owed is more than the amount of the original loan. To avoid this problem, it is important to always have a plan for meeting the repayment deadline before agreeing to take out the loan.
Understand what happens when a payment is late or past due
Some title loan companies require the use of ignition devices that interrupt your ability to start your car if a payment deadline is missed or you default on the loan. Some also use global positioning system (GPS) equipment so that they can locate your car, should they seek to repossess it. Since either of these options can be embarrassing or inconvenient, make sure you are informed about them before agreeing to a title loan.
Title loans can help you access immediate funds in case of an urgent need. If you are seeking this type of lending option, always make sure to contact a reputable title loan provider in your area to learn all the details.