Why Would I Consider a Car-Title Loan?

Many of us have never heard of a car-title loan and thus wouldn't consider it as an option if we needed money quickly. But individuals who can't get money from mainstream financial institutions are often drawn into the credit card trap. That is to say, they end up getting a high interest-rate card since that is all that is available to one with a poor credit rating. Then they begin the never-ending cycle of making minimum payments each month and watching their debt grow. With a credit card in your pocket whenever you need it, you can generate a mountain of debt very quickly and very easily.

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With car title loans, like with high-interest credit cards, the interest rates are higher than loans financed by typical financial institutions due to the higher level of risk involved when lending to individuals with a poor credit rating. However, car title loans have set terms of payment, meaning that you can't fall into the trap of paying the minimum payment and having the interest accumulating more quickly than your payments. A set payment schedule means that your loan will be completely paid off within a set period of time. Unlike a credit card, you won't be paying off your car-title loan for the next 10 years, provided you find a reputable lender. Indeed some car-title loan lenders will attempt enter you into an agreement which will have you paying interest with no capital for months and even years, so establishing the good standing of the lender you use is essential to having a positive car-title loan experience. Finding a highly regarded lender can also ensure that the payment plan you agree to will be one that suits your budget.

So what exactly is a car title loan you might be asking? It is simply a loan usually given to individuals with a poor credit rating or no credit that uses the borrower's car as collateral. The car remains in the borrower's name at all times unless they cease making payments on the loan in which case the car's title is transferred to the lender. Since a car-title loan is secured by the borrower's vehicle, the loans are usually processed very quickly and funds can be transferred within hours of submitting an application.

Due to the level of risk involved, car-title loans are certainly not for those with a good credit history, who can obtain financing through standard channels. These loans are for those who, due to poor credit, can't obtain money by approaching a standard financial institution, and whose only alternative is falling into the credit card trap. For these individuals, a car title loan might just be the best solution when money is urgently needed.

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