Payday Loans and Fast Cash Guide | When Are Auto Title Loans The Best Choice?

When Are Auto Title Loans The Best Choice?

Filed Under Cash Loan For Cars Pink Slip, Secured Loans, Title Loans | Leave a Comment

Auto title loans are a great way to get cash fast.  They can offer much more money than a payday cash advance does, and the approval process is much easier.  What this means for many people is that they’re lent more money than they can afford to repay, and they get themselves into trouble.  I’m not going to tell you that you shouldn’t use pink slip loans to help you out, but I’ll show you a few things to consider before you sign on to accept the loan.

The major advantage of an automobile title loan is that it’s the easiest bad credit secured loan available.  You don’t need to own a home, or have any other sort of collateral.  Your car is your meal-ticket.  Another upside is that in many cases you don’t even need to be employed.  This is one of the few loans for unemployed available.  The loan still has to be paid back, and that can be hard to do without a job, but we’ll talk more about that later on.

How Do Auto Title Loans Work?

Before digging into when you should choose title loans, we should back it up and give a quick explanation of what they are and how to get them.  Put simply, a title loan is a secured loan (a loan with collateral) that doesn’t require a credit check.  You need a car that’s paid off, the title, an extra key, and proof of who you are.  You’re lent money based on how much your car is worth, and you can usually get up to 50% of its total value.  Some lenders have a minimum amount that they’ll lend, cars with a minimum value of $5000, this is more common here in California but almost non-existent in states like Arizona.

After you’ve been approved for a pink slip loan, you’re given terms of when to pay it back.  Some loans are short-term, like payday loans, while others will give you a few months and a payment plan.  If you have a choice, go with a longer term loan.  It’ll probably carry a higher interest rate, but the smaller payments will be much easier to swallow each month/week.

If you don’t pay the loan back you’re in trouble.  You many have terms that will allow a short grace period, with very high fees, to get the money together.  Title lenders build their business around repossessing and selling cars.  This means that there isn’t going to be any hesitation on their part when it’s time for them to take your car.  In some states they aren’t required to pay you the difference between what your car sold for and what they were owed, so you could end up losing big!

Still Want A Title Loan?

Of course you do, or you wouldn’t have read this far down!

Like I said above, title loans are a great resource for getting fast cash.  The key is being able to pay it back.  Many people get in trouble because they borrow more money than they’re going to be able to repay, this makes them doomed from the time they sign the paperwork.  It isn’t the title lender’s job to be your financial adviser, so you can’t rely on them for solid financial advice.

Let’s run through a scenario to help you understand how this works.  For the sake of the example, let’s say that your refrigerator broke and you have to buy a new one, a $750 expense.  You make $500/weekly at your job, or $2000/month before living expenses are deducted.  You’re offered a $1000 loan from from the title loan company, to be repaid 30 days from today at the rate of $25 per $100 borrowed (a common rate).  From the start, you’re in trouble since you’re about to borrow $250 more than you needed.  That extra $250 is going to cost you $61.50 in interest!

To repay your loan, the total amount due is going to be $1250.  Basic math tells us that you’re only going to have $750 left from your month’s salary to cover the rest of your living expenses, or $187.50 a week!  That’ll barely cover food!  If you would’ve only taken the amount of money that you needed, you would end up with $265.63 each week, that’s much easier to swallow!

The lesson here is to only take what you need, or you’re going to pay them interest on money that you would have had in the first place!

When Are Title Loans The Best Choice?

Title loans are the best choice when you need money and will realistically be able to pay it back.  People who don’t have a job don’t have a lot of places to turn for a loan, and pinkslip loans are certainly an option.  The only thing that you must remember is to not bite off more than you can chew!  You’ll lose your car and a ton of money!

Related posts:

1. Title Loans
2. How To Find Title Loans In Your Area
3. Car Title Loans
4. How To Find The Best Rates On Title Loans
5. The Facts About Online Title Loans
6. Online Title Loans
7. Title Loans For The Unemployed
8. Automobile Title Loans
9. Which No Credit Check Loan Is Right For You?
10. Are Cash Advance Payday Loans The Right Choice For You?

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