Title loans have grown in popularity as a quick way to obtain cash for bills, debt, other outstanding loans, or in financial emergencies. While title loans seem like a good option for those in financial need, they also come along with some risks. And every title loan applicant should be aware of all the risks as well as become knowledgeable of the industry risks, and even how to compare title loan offerings to make an informed financial decision that is not only safe, but will help individuals get out of debt.
Comparing title loans can be tricky and risky, especially if you aren’t sure what you are looking for, or really understand what is involved with a title loan. Here are some tips to ensure you know what you are looking for and really getting yourself into.
- Look at the interest rate. One of the first things every title loan applicant should look at is how interest is computed and over how long, and how the terms are detailed. Title loan lenders often charge higher interest rates (sometimes as high as 300%!) due to the high credit risk associated with the loan.However, while this may certainly be understandable, it also makes it incredibly difficult for an individual to completely pay off the loan. Unfortunately, as a result, many fall victim to title loans and end up defaulting and losing their vehicles. Don’t let this happen to you!
- How often is interest calculated? After looking at the interest rate of a title loan, look at how often it is calculated. For example, when you see 4% as an interest rate, before you get excited, check to see how often that is calculated. Some title loan lenders try to trick applicants and think they are getting a good interest rate, then they find out that, that 4% is actually calculated on a monthly basis. As a result, the title loan applicant ends up paying 48% for the year…which isn’t as good.
- Penalties. The next thing every title loan applicant should look at is the penalties. Are there penalties for missing a payment or making a late payment? Or are there penalties for paying off a loan earlier than the specified terms? Some of the more difficult title loan companies and lenders to work with will repossess a vehicle after only one missed or late payment.
Now that you are armed with more information on how a title loan works and the red flags to watch out for, you will hopefully have more confidence in comparing title loan options and offerings.
All in all, those individuals who are looking for a way to solve their financial emergencies and settle their debt can trust in Affordable Title Loans. Affordable Title Loans is one of the Utah title loan companies that individuals have the most success with. Affordable Title Loans takes the time to take care of their customers and aren’t in the business of trying to trick or make victims out of them. Count on Affordable Title Loans for Utah title loans that will help you settle your debt safely and fast!