Financial stress or a cash crunch is part and parcel of life purely because there are multiple demands being constantly placed on our limited sources of income. It requires great fortitude and discipline and vision to come out of such crises unscathed and with your assets intact.
The very first lesson (the harshest) we learn in such situations is that the friendly neighborhood banker is not so friendly when he is requested to part with small sums of cash for emergency situations that normally leave you just a couple of hours or days to react. It will be humanly impossible to comply with the banker’s demands and paperwork and fulfill his steep credit assessment parameters, when you are worried sick how to meet that cash payment deadline.
The auto title loans are the most reliable solutions for relieving financial distress, purely because they cut through the formalities and paperwork leaving you clutching the exact amount of cash you want, within a couple of hours at the most, and critics have the audacity to label car title loans as predatory lending!
It has to be acknowledged, in the car equity loan, that the very act of placing cash at your disposal within the shortest of time frame is veritably an act of faith. In auto title loans, the lender has not conducted any deep assessment of the credit risks involved, he may not have insisted on quantifying your credit worthiness, in fact he may be aware of your bad credit history, still that does not prevent him from extending the loan, and that too within hours-not days and weeks as in the case of the banker. Therefore, one would consider it legitimate on the part of the auto equity loan lender to levy a higher quantum of interest to cover risks and recover his profits within the shorter time frame.
In auto title loans the deal is extremely transparent and the borrower is made aware of the interest component that is factored into repayment, and the borrower need agree only if the repayment (interest-loaded) is within his repaying capacity. It has to be ensured by the borrower that he does not fall prey to fly by night lenders who are out to squeeze 300% APR or more that tantamount to usurious interest. There are honest lenders who levy reasonable rates and it is your responsibility to hammer out a mutually acceptable interest rate that does not hinder your ability to repay the amount stipulated.
The golden rule is never to take auto title loans or cash title loans as they are called, lightly and ensure there is some payoff available to clear the loan outstanding when you anticipate trouble. Also, as a rule, never succumb to the temptation of rolling over a loan, as the interest gets compounded, and your liabilities get doubled in no time at all.
So far, we have seen that these auto title loans have the best loan delivery time frame that beats bankers hands down, and we can also understand the compulsions that determine the higher interest rates they are charging. There is one more factor that is equally crucial, and that is loan security. The banker lures the borrower deeper into debt by binding the borrower to a long term contract running into years where the monthly repayments and interest payouts are deliberately kept low enough to beguile the public into believing that they have the best deal in town; the reality is that the borrower is merely postponing payment indefinitely while interest rates and miscellaneous expenses increase manifold. The situation in a bank loan gets even more complicated because tangible security in the form of your home or property is tied up as security for their collateral loan. Loan default can result in forfeiture and repossession of your assets leaving your life disrupted beyond repair.
Borrowers availing car title loans or auto collateral loans are liable to lose only the item pawned and nothing more, as the lender has recourse to auction only the pawned car and has no legal claim over any of your other assets or income that remain intact. Besides, unfair trade practices indulged by unscrupulous companies extending pink slip loans can be challenged in court provided you have protected your own interests by reading the fine print before signing the loan contract.
The quantum of the loan that a banker provides is directly connected to the income you earn, it is usually a multiple of the mean monthly income and the repayment is fixed as a percentage of your income, to ensure that you carry home something for your personal needs, after satisfying the loan repayment obligations. This begs the question, what about people who have modest incomes, does this system work for them? Frankly, the answer is NO. People hailing from the lower income strata will find it extremely difficult to meet their monthly payment obligations, month after month, year after year, particularly when the going gets financially tough. The car title loans adhere to a shorter repayment period; usually not more than a month which is perfect for the low income worker as he quickly settles his debt with the forthcoming pay-check.
Moreover, these fast car title loans are smaller in quantum and more manageable and linked to the borrower’s existing sources of income. The chances of the borrower defaulting on auto title loans is extremely low, and if such instances do occur they will normally be due to fiscal indiscipline, or living a life purely beyond one’s means. Instances of lenders of installment loans in California waiting to grab vehicles at the first sign of default so they can auction them and make money, are grossly exaggerated. The expenses involved in repossessing used vehicles and the time and money and formalities involved in auctioning the pawned assets are simply not worth the trouble.
Without the shred of a doubt, it is the disciplined and responsible borrower who avails auto title loans, that is having the last laugh as he gets to resolve his financial woes quickly, settle cash contingencies speedily, and gets to keep his car and his home and all other assets intact, while repaying his small loan comfortably within the shorter term.