Every industry has its share of misbeliefs and falsehoods, auto title loans included. So, if you’re thinking of getting such a loan to help get you through an emergency, don’t be dissuaded by scuttlebutt that is universally accepted as truth, but really isn’t true at all. Keep reading as we clear up some of the most common auto title loan myths for you.
You’ll Have to Relinquish Your Car
This is patently untrue. In fact, the opposite – you get to keep your car – is a title loan feature. In fact, without such a loan you may have to sell your car to secure the funds you need for whatever emergency you have. Yes, there are shops that will enable you to pawn your car, but you’ll need to hand over your keys. That’s an entirely different situation.
Auto title loan companies will just hold your vehicle’s title until the loan is repaid. In the meantime, you’ll still have transportation. Afterall, title loan companies want you to be able to get to your place of work so that you’ll have funds for repayment. Make sense?
And if you’re having trouble making payments, most auto title loan companies will work with you to derive a plan that will help keep you from losing your vehicle to repossession.
Such Loans are Too Difficult to Repay
It’s commonly thought that if you take out an auto title loan, you’ll ultimately be unable to pay it, forcing you into a cycle of borrowing and indebtedness that will leave you in worse shape than when you started.
For one thing, you’ll be apprised of repayment terms from the start, so there’s no guesswork there. You’ll also be able to easily figure out how long it will take you to repay your loan. You’ll have a clear view all around of what you’re getting into so that there are no surprises.
You’ll Get Hit with Hidden Fees
While some industry aspects are the same, it’s true that some companies will hide fees that appear out of nowhere. Each company is different, which is why it’s key to do your homework on the company in which you’re interested. LoanMart, for example, have payments that are wholly amortized with terms from one to three years. You’ll know from the get-go how much your loan will cost, and representatives will be available to answer any questions about your title loan.
Interest Rates Will Be Through the Roof
Here, too, it depends on the company. But in general, you should treat one of these loans as a short-term obligation by wiping it out as soon as possible. Rather than forking over finance charges for months on end, your aim should be to erase the debt as soon as possible – in weeks, if you can. This way, you can offset any high APR and the lender will get repaid. Just be sure there is no prepayment penalty if you pay off the loan early.
You Need Good Credit
While this is true for nearly all bank loans, it’s certainly not the case with title loans. In fact, such companies don’t even check your credit. They don’t care about your scoring or your employment history. You will have to demonstrate that you can repay the loan, by providing bank statements, pay stubs, or proof of other forms of income. But that’s to be expected. In the main, all these companies want to know is what kind of collateral you’re offering in the form of your ride. The more equity you have in your vehicle, the more cash you can borrow.
Now that we’ve debunked some common auto title loan myths, you can seek out such a loan with confidence knowing that all you need is a title in your name, loan repayment ability, and vehicle equity to make your emergency go away.