There are occasions when sickness or disabilities strike us, there may be children’s education expenses to be paid, or building repairs urgently needed, or even a car refurbishment expense, all of which need immediate cash that happens to be a little beyond our means. Traditionally, the larger banking institutions have always remained beyond the purview of the low income earner, the person of small means, and the people who need small cash to just get by. It is unrealistic to expect these larger institutions to help you overcome your small but genuine financial emergencies. The car title loans are easily available, on call, on demand and they only require that you own a car and have exclusive title to it, and it is maintained in good working condition, that maximizes its resale value.
The banker usually shies away from vehicle title loans for smaller amounts repayable in the shorter term as these loans are difficult to follow up and more risky. He prefers the larger loans that can be appraised using credit scores that determine the financial health and credit worthiness of the borrower, and naturally this system ruthlessly eliminates loan applications from the majority of people who may be having a history of strained loan repayments, and people who are designated as a high risk category. The auto title loans are not influenced by the financial condition of the borrower or deterred by his bad loan history, they remain focused on the resale value of the car, the owner’s title to the vehicle and the reasonable assurance that the borrower has the means to repay the loan, no matter how modest that income.
The banker, in his paranoia for securing his loan, insists on collateral security such as your home or landed property or salary income even though what he is lending is just a small fraction of the value of those assets or income. It is an undeniable fact that millions of lives and dollars are getting locked up in repossession and forfeitures initiated by banks in their collateral loans, where the loan amounts may be exceedingly low compared to the valuation of the pledged assets, and where the borrowers may not have been given a fighting chance or a fair repayment program to redeem those assets. The auto title loans transfer the title of the car to the lending company, but that is only for the duration of the loan and the borrower retains possession and continues to operate the car, losing none of his freedom. These auto collateral loans are liquidated faster, and full repayment in the short term assures freedom from all liabilities. Even assuming extreme cases of default, the borrower loses only the car, not his home or salary income that could render the family destitute. In fact the borrower has a far better chance of repaying the car title loan faster than the bank loan wedded to long and interminable scheduled repayments that can go wrong at any time.
It’s a fact that title loans and lending are not cheap or getting cheaper by the day, so one has to choose those loans which ensure that your final payouts by way of principal loan amount and interest do not strain your ability to repay the loan. The very nature of a bank loan involves long term repayment. This stretches the loan repayment to the maximum extent possible in order to extract the maximum interest from the borrower. The borrower gets fooled by the low monthly installments and apparently “lower” rate of interest in the beginning. Merely glancing through an amortized repayment schedule will convince you that what you end up repaying may be two to three times the original loan amount, yet these practices don’t tantamount to predatory lending! The car title loans, also called pink slip loans are inherently more transparent, they clearly tell you the interest charged to your loan, and finalize a repayment schedule that fits your repaying capacity. If the lender is unsure of your repaying capacity he will deny the loan or lower the loan amount. You only need to watch out for unscrupulous entities who are out to hoodwink the public by charging 300% APR, or companies that introduce unfair arbitration clauses in their contracts.
The health of the entire fast car title loans industry and the borrowers that avail these title loans, whether in the short term or long term, rests on fair lending practices on the part of the companies and responsible behavior on the part of the borrowers. It is the responsibility of the lender to ensure that he operates without violating the lending laws of his state. You can check the veracity of car title installment loans in California and many other states by browsing reputed sites like http://www.responsiblelending.org/ or http://www.consumerfed.org/ to avoid getting ripped off.
Before availing car title loans, the borrower must ensure:
- – He avails only the amount that he can safely pay back
- – Never take a car equity loan for the heck of it or for frivolous pursuits that he may regret later
- – He must ensure that there is some mechanism, either in the form of a paycheck or fund inflow that will unambiguously take care of repayment
- – Never renew title loans as that makes matters worse as interest piles up; the borrower must never lose sight of the fact that the interest meter is ticking faster and higher as time goes by in short term loans
- – Don’t pay heed to the marketing pitch of auto equity loan sales personnel that pressure you to make spot decisions without allowing you time to thoroughly evaluate the terms and conditions governing these loans
- – Try to get out of the debt as fast as possible without allowing the loan to run its course, if your financial situation improves; usually, there are no prepayment charges
Car title loans are a great idea for those people who use the system wisely to mitigate their financial distress, and for people who take the pains of researching and approaching the best title lenders who follow established norms and fair practices; these loans represent the best short term options for the small income people, and they have become an integral part of our social fabric. Don’t allow a small minority of unscrupulous lenders to spoil the honest image of the majority of pawn car title companies, and make you think otherwise!