5 Tips for Choosing Which Auto Title Loan is Right for You
Title loans are over-secured, high-interest loans that many people with low-income and bad credit often get when they fail to qualify for a credit card or prime rate bank loan. The over-secured, high-interest loans are often designed to keep borrowers in a debt cycle that often grows bigger and wider with each interest that is inflated.
Let’s look at this carefully. Unless you can pay back your title loan with an immediate effect at the end of the term in full, no title loan is best at any instance. Choosing between any particular lenders is a matter of choosing how you can die slowly by using either a bullet in your head or a knife in your stomach.
For this reason, the best way to choose the best title loan is a matter of realizing that there are no better vehicle title loans in the market. However, you will do anything you may want to do. If you opt to choose an auto title loan, your due diligence research on finding the least horrible vendor will be the best approach.
An Auto Title Loan
An auto title loan is one that you cash in your vehicle title to get money from a lender. In return, you get back a quarter of what your car is worth and pay way more than you borrow. If you fail to make the last payment, you risk your car being repossessed. Because that is like using a bullet to your head, you may be at a better stand if you chose the auto title loan.
In other occasions, the lender can give you some few months to repay your loan by rolling it over for the next few months. During that time, you will be paying increased interest rates that can add up to over twice the amount you borrowed. That is like using a knife to your stomach. Before sweeping to take your car, the lender can let you bleed for some time. Just like a cat plays with the prey before it eats it.
How to Choose the Best Auto Title Loan
Before you start looking for an auto title loan, be sure to make yourself conversant with the title loan terms before signing the document. For this reason, scroll down to the list of potential loan distributors and follow the following tips to choose the better one.
1. Find out the Annual Interest Rate.
An annual title loan for automotive has a monthly interest rate that stands at 25 percent. That interest rate does not sound so horrible in the first place. You might have owned credit cards that are rated an interest rate that is not far from that. However, the vehicle loan translates to an APR of 300 percent. This simply means you can end up paying $4,000 if you borrow $1,000 and roll it over for a year.
2. Find out if they have a forced arbitration clause.
Many lenders engage in bad work practices. For this reason, your disputes or complaints can be waived if you sign a document that has a forced arbitration clause. You will have a hard time to have your lender listen to any of your complaints. This includes forking the surplus proceeds that emanate from your car getting sold to recover their loans.
3. Find out the fees that are charged and the presence of add-ons.
One thing to consider is the astronomical interest rates. However, additional fees are often accompanied by many auto title lenders. Most of them charge additional fees accompanied by interest rates such as life insurance, comprehensive coverage, or the roadside assistance. Don’t sign a contract that has this inclusion.
4. Find out about the early repayment penalty.
Repayment penalty will punish you for trying to repay your loan early. This means that you will pay the total money, including interest rates, for a three-month loan term even if you pay it at once before the term expires.
5. Find the number of times you can roll the loan over.
The chances are that you may delay paying the loan for unavoidable reasons. If the loan is rolled over indefinitely, it will be worse. Let the lender hand a maximum of eight rollovers for your safety.
If you don’t find a good auto title loan lender, it’s time to find other ways of sourcing your money.