Advantages and Disadvantages of Auto Title Loans

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Auto or car title loans have now become a popular way to get a car quickly. They are being widely used, as they bring some real benefits. However, like any cash loan, car title loans imply certain risks. Here are the main benefits and drawbacks of car title loans. 

Benefits: 

1. The main benefit of auto title loans is that they allow borrowers to quickly get the money for purchasing a car. It usually takes a day or two for these loans to be processed. This is because auto title loans comprise a simple process involving a lender examining your car in order to make sure it is worth the amount you’d want to borrow. 

2. Anyone who has a car can obtain an auto title loan. That is because there are no credit score verifications involved in the process. As a rule, a lender will give you a secured loan, meaning that this loan is based on some collateral that you will have to provide. Unsecured car loans involve no collaterals or guarantors. However, in this case the given money will have to be paid back with interests. As practice shows, auto title loans have rather high approval rates, as there is literally no risk for the lenders. This type of loans is also ideal in case you have a bad credit rating. Banks will most likely reject your application if you need money to cover your current debts on payday loans, for instance, or bills. But the car title loan will bring you what you need if you have a car. 

3. While you have your loan out, you will be able to keep your car and drive it. You will have to give the pair of keys along with your title to the lender, but you will still be able to drive. Your lifestyle will remain the same, and you will get your money. 

Drawbacks: 

1. Auto title loans are delivered for a short period of time, usually around a month. The interest rates are low at the beginning, but they will rise to higher levels for every additional month that you need extended. So, if you are borrowing a considerable amount, you may find it difficult to repay in the short period. In this case you may end up paying more than you have expected. 

2. Like any secured loan, car loan implies the risk of losing your pledged assets. The lender will have the right to take your vehicle in case you fail to pay the loan back. The lending company will naturally sell it to make up for the lost money. However, if the sale price is less than the amount you owe, you will be in charge of paying the difference. In addition, if your lender sells the car and makes more than your debt, he will keep that as well. 

3. The attractiveness associated with quick and easy cash can make you take ill-considered decisions. There are always some risks waiting for the borrower which may lead to losing the car. So, make sure you know all the risks involved in your auto loan before your pledge your means of transportation as collateral. 

Finally, auto loans are good ways of getting a vehicle fast, provided that you are able to pay them back in due time. So, it is highly recommended to carefully weigh all the pros and cons before applying to these services.