Your car is one of your most valuable assets and you can use this fact to get money fast. If you need money to cover bills between paychecks or to pay for emergency expenses, you can get loans in Lafayette LA by listing your car as collateral. If you have bad credit, you can get a loan at a much lower interest rate with a title loan than with an unsecured personal loan.
If you are thinking about applying for a title loan and are unsure of where to start, this article will cover everything you need to know. We’ll help you understand what title loans are and how they work. By the end, you will be able to make an informed decision about whether this type of loan is right for you and where to get it.
Understanding title loans
Legal loans increase the value of your car to help you get a loan at a lower interest rate than you could get with a loan alone. With this type of loan, your lender retains ownership of your vehicle until you have paid the loan in full, as well as interest and fees. Even if your lender retains ownership of your car, you can drive away in your own car.
However, keep in mind that a title loan does give your lender the right to get your car back if you stop making payments. This partly explains why they might offer lower interest rates than you might get with a paycheck or individual loan. If you stop making payments, the lender can still recover some of their losses by returning your car and reselling it.
Of course, most people who take out a title loan do not lose their cars. As long as you make payments on time, your lender has no legal rights to your vehicle. Just make sure you are confident that you can make payments before taking out a title loan.
Title loan interest rates
The main advantage of a title loan is that you can use the value of the car to get a better loan offer. If you have bad credit, you are most likely to face high interest rates when applying for an unsecured personal loan or payday loan Lafayette LA. But because a title loan limits the lender’s risk to some extent, you can get a loan at a much better interest rate, regardless of your credit history.
However, loan companies in Lafayette LA still charging high interest rates on title loans. Many lenders charge a monthly interest rate of up to 25%, which equates to an annual interest rate of over 1,000% throughout the year. This annual interest rate may be better than payday loan offers, but it is still 10 times higher than what most financial experts recommend as affordable.
It is important to weigh the fact that you could lose your car if you fail to make the payments on your title loan. While getting a loan because you have not been able to pay off your payday loan is bad, it is often not as financially damaging as losing your car. So, before you go this route to borrow money, think carefully about whether you can consistently pay on your title loan.
Getting money fast with title loans
A potentially important advantage of title loans is that you can get cash quickly. Many lenders have walking areas where you can have your vehicle appraised and approved in 30 minutes or less. You leave home with cash and drive away, even if the lender retains ownership.
If you don’t meet payment deadlines or need money immediately to cover emergency expenses, getting your loan the same day can make a huge difference.
Alternatives to title loans
There are several alternatives to title loans, many of which may be the best money-making options depending on your situation.
- Payday loans – You can get cash within 30 minutes and many lenders do not require a good credit score. Interest rates are often higher than on title loans, but you won’t lose your car if you miss payments. However, payday lenders usually require you to have a job and a minimum annual income. On the other hand, lenders may not require you to work;
- Pawnshop loans – You provide personal property as collateral for your debt. Jewelry, household appliances or other valuables are accepted as collateral in a pawnshop loan. Interest rates on pawnshop loans are usually higher than on title loans;
- Personal loans – There are many loan companies in Lafayette LA who are willing to offer unsecured personal loans even if your credit is poor. Their approval can take several days, but interest rates can be much less than what you will be offered with a title loan. If you miss a payment, your credit score will lower, but you won’t lose your property or car.
Government title loans
Government loans are better regulated than other types of loans. In fact, car title loans are only available in 23 states.
In these states, the minimum and maximum amounts you can borrow, the maximum interest rate you can charge, and the fees that can accompany your loan vary widely. Some states allow borrowing from $10,000 to $25,000. Check with your state’s regulations or talk with your lender to find out what title loan options are available in your area.
Conclusion
Title loans allow you to leverage the value of your vehicle by helping you get a loan at a lower interest rate. The catch is that your car is at stake, and if you can’t make a payment, your lender has the option to take your car away from you. Therefore, it is important to make sure that you are able to repay the money you borrowed before taking out a title loan.