Are Title Loans Safe?

Title loans can be a good source of quick cash offering between a good $100 and $10000 in exchange for your asset’s title as a collateral. These loans come under the category of secured loans where the lender can take the property if you don’t pay. You can have better insights by visiting https://fasttitleloansnearme.com/title-loans.

How do they work?

A borrower heads to the lender with the asset and its title. Lender, after evaluating the asset’s value, offers a loan on basis of percentage of the amount. The average loan a person can receive is $1000. Borrowers even get the money on immediate basis but the lender continues to hold the asset as collateral until loan is repaid.

Are they safe?

Title loans have special characteristics that make them more unsafe than many other financial products. One simple example is that many lenders require access to borrower’s bank account in order to make withdrawals. Many legal jurisdictions have prohibited this requirement but lenders continue to exploit borrowers by forcing them to make this choice by charging them with higher interest rates.

As mentioned above, lender can repossess the asset in cases where loan is not repaid. To make sure this happens, many lenders require a set of keys and even gets a GPS tracking device installed in cases where car works as collateral which can be perceived as an infringement of privacy.

Here are some other unfavorable characteristics that these title loans possess:

• There are a number of excessive fees involved like administrative fees and origination fees. It keeps on adding up as you proceed further. Accumulation of fees can cost you a great deal of money in the long run.
• Banks tend to charge 10%-12% APR on personal loans. However, the amount increases three times when it comes to title loans. Loan seems to appear affordable here because interest is usually expressed in monthly terms. Where the states do not have strict regulations on title loans, the average rate on a tile loan keeps on soaring.
• The repayment period is usually very less. It is conventionally only 30 days. If the borrower fails to satisfy the condition, the loan is renewed which adds another layer of excessive charges. Title lenders depend on the customer’s inability to repay the loans. As a result, borrower doubles the amount he originally borrowed.
• There is form of undertaking in relation to borrower’s ability to repay the loan. Lender doesn’t have any requirement to do so as well.
• You can doubt marketing of these services. The product they tend to show is not the same in actuality. There are in fact limited financial resources and options to the borrower.

Conclusion

Title loans have its own pros and cons. As a general point of view, people do rely on these loans to meet their future demands without realizing the fact that how much they are losing in the present. Until and unless you can ensure that the loan lending company can be trusted absolutely, do not consider this option.