Will an Online Title Loan Save You Money?
Can you save money with an online title loan? I suppose the answer to that question really resides in your personal financial situation. As we have mentioned in previous articles we strongly believe that these types of loans are not designed for everyone. They certainly aren’t a one size fits all financial product. In fact, if we were to guess, these loans are not for most people. Unfortunately, many consumers try to fit a square peg in a round hole and they find themselves hating the fact that they signed-up for an auto loan.
For these reasons alone, these types of loans have gotten a bad rap. They are high-interest rate loans and yes, they can repossess your car if you fall behind in your payments. But here’s what many pundits fail to realize. The lenders don’t want to repossess your car. They make more money if the consumer pays-off their title loan. They don’t want to take your car and sell it because they’re taking the vehicle to auction. Taking your car to auction comes at the risk that the vehicle won’t sell for the price in which they loaned the consumer.
Also, many people who can’t qualify for a traditional loan where credit is important and the time of employment is nearly as important can access money quickly. I’m not going to hypothesize different circumstances that would qualify for a financial emergency. But what I can do is say that there are situations where someone who finds themselves in one of these situations certainly has options, and one of those options is using your vehicle as collateral to access cash quickly.
Yes, these loans come with high interest rates, but what many consumers don’t know is that many lenders allow you to pre-pay your loan without penalty. If you don’t know what that means, it means that if you have a $100/month payment that is due on your loan and you find yourself able to pay $150, you won’t get penalized for paying the extra $50 a month. What’s great about paying the extra payments, the principal of the loan will be paid down quicker and the loan in conclusion will be paid off sooner and the consumer will pay less in interest rate charges.
Online car title loan companies all offer different terms and rates to their loans. These lenders need to follow the rules that the states that they lend in have set forth and interest rates on those loans are capped. Interest rates on these loans are really high and much higher than traditional loans that you could get from a traditional bank. So if you’re looking for short-term financing, such as payday loans and or title loans, they’re viewed as predatory. So much so that many companies cannot even advertise online because Google and Bing won’t allow it. Those companies need to be very transparent with the APR of these loans and if the interest from these loans are over a certain amount, Google and Bing will not allow the advertisement on their platform.
If you’re going to go the route of short-term financing because you find yourself in a financial emergency, and you’ve exhausted all other options of accessing money, then you should consider one of these loans. However, we strongly want to urge you to pay-off your loan as quickly as possible. So when you’re looking for a company that will lend to you, make sure they do not have a pre-payment penalty. If they penalize you for making extra payments, then move on to another company.
So in conclusion, yes, an online title loan can save you money in the long-run if you have a situation in which the problem is causing more outflows of cash than what the monthly payments of an auto title loan may cost you.