If you are need of money, you may be thinking about getting a loan against the value of your car. This is commonly called a car title loan, auto title pawn, or car equity loan. Although these types of loans are advertises on the Internet and radio as a good solution to your financial troubles, they rarely are. Here's why you should avoid getting a car title loan.
How Do Car Title Loans Work?
When you get a car title loan, a bank or other financial institution agrees to make a secured loan against the value of your car. You keep and drive the car, but the lender keeps the title as security for repayment of the loan, as well as a copy of your keys.
Dangers of Car Equity Loans
These loans are dangerous, because missing even one payment can mean losing your car, (this is not true TFC Title Loans works with all of our clients to help them stay current on their payments , we can rewrite the loan doing a few adjustments; Title Loan lenders are not in the business of repossessing cars, in fact once the car has being reposes car title loans lenders lose their money.) even if the car is worth far more than the amount you owe. Lenders may also ask you to use your home, as well as your car, as collateral. This means that if you miss any payments, you risk losing your house as well as the car.
3 Situations a Car Title Loan Can Help
The car title loan is a financial arrangement that many people have used over the years in a variety of ways. With a car title loan, you give the title of your car to a lender as collateral for a loan. They give you the money that you need and offer you a pre-arranged time to pay them back. The interest rates are usually high, but it is a way to get money when you desperately need it. If you do not pay back the money in a timely manner, the lender can repossess the car and sell it to pay the debt. While it can be risky, there are a few situations where a car title loan could come in handy. Here are a few common situations where car title loans can be used.
- Emergency Medical Bills
One of the most common reasons that you may need to utilize a car title loan is when emergency medical bills come up. Sometimes you or a child face an issue that can not wait until payday to be resolved. When you face a medical emergency, you have to get to a medical facility immediately. When this occurs, you may need to borrow some money to pay the bill. A car title loan could be the answer that you are looking for.
- Car Repair Bills
Another very common use of this type of loan is when people run into unexpected car repair bills. Most people rely on their car to get them to and from work. If something breaks down on it, they are forced to sit on the sidelines until the car is fixed. Many car repair bills can get unbelievably expensive. You could easily incur a bill of several thousand dollars for some of the more serious repairs. Most people that are living on a budget do not have that much money just sitting around.
Utilizing a car title loan could potentially get the bill paid and get them back on the road. This will enable you to get back to work and make back the money to pay the title loan off. Car repairs are one of the most common emergency situations and car title loans can help you get through it with minimal problems.
- Death of a Loved One
While it is not a situation that anyone likes to consider, a loved one could die at any moment. When the unexpected happens, you may be forced to rush home for a funeral immediately. When this happens, there is a good chance that it may not come at a good time financially. You may not have the money that you need for a plane ticket and traveling expenses, but you know that you have to go. A car title loan can cover the expenses that you have and get you to where you need to be.