Is Taking Out a Title Loan to Pay Bills Really a Good Idea?
May 30, 2017
It can happen to anyone; you run into car trouble, an unexpected cutback of work hours, a death in the family or another event that sets you back financially. Often when people go through those times and they don’t get assistance either from their local Department of Social Services or family or friends, they’ll look at hardship loans such as vehicle title loans. These loans can usually get most people who own vehicles cash in hand to manage expenses for the time being, but many experts warn against their high fees, interest rates and possibly losing your vehicle if you default on payments. If you do need to use a company that specializes in title loan services nashville tn, make sure you know what you’re getting into first.
Knowing If You Can Repay a Vehicle Title Loan
It’s important to check state laws on title loans, and Tennessee has their own laws on the books here that you should familiarize yourself with so that way you know for sure that you qualify for a title loan, and so you don’t get scammed if a lender violates one of the codes. But most importantly, you need to know how much you should expect to pay in a month with interest rates and upfront wire transfer fees or administrative costs. If possible, you should have your funds sent another way, so you’re not charged for a wire transfer even though it might delay when you receive the funds. But the key is you should push for repaying your loan as soon as possible so legal actions are not taken.
Why Title Loans Are Easy to Get
One reason you can usually qualify for title loans as long as you have a vehicle and an income source is because lenders don’t usually check credit. Although lower income borrowers and their financial situations make them highly risky, having a vehicle to use as collateral offers the lender security for their loan which is why generally a title loan will only be made for about 20-50℅ of the vehicle’s value, depending on state law. What usually happens is the lender will appraise the vehicle to find out it’s value through both an online calculator and an on-site inspection, and then determine the loan principal from there. But they’ll put a lien on the title and usually hold it until the loan is completely repaid. Usually you’ll have 30 days to repay it, which is more time than payday loans offer usually, but remember interest rates accumulate each day. If you can’t pay the loan off, you can usually pay the interest amount due to move back the loan one more month, but in some cases, there is a limit to this.
In conclusion, if you truly have no other way to borrow money and your creditors will not work with you, then you may be stuck needing to use a title loan. But you should look into resources from important agencies like the Consumer Financial Protection Bureau (CFPB) who may offer better advice. Once you do take out a title loan, it’s also good to have a backup plan just in case you see your vehicle confiscated.