What Are the Drawbacks of Title Loans?

title loans

As the name suggests, title loans allow you to use your vehicle’s title as collateral in exchange for a short-term loan. These loans are typically marketed to consumers who have poor credit and no other borrowing options. Although they come with a number of significant drawbacks, they can provide quick cash for those who need it most.Go here:viptitleloansinsanfrancisco.com/

The lender evaluates your vehicle’s value and provides you with a loan offer based on a percentage of that valuation. Typically, you’ll have 15 to 30 days to repay the loan principal plus fees and interest. This can result in an APR of more than 300%.

Turning the Key: How Title Loans Can Benefit You

Unlike other forms of financing, title loans don’t require a credit check. This is because the lender takes a lien on your car to secure the loan. However, this is not a permanent lien and your vehicle’s title can be returned when you pay off the loan.

Additionally, most lenders don’t report your loan or payment history to the credit bureaus. This means that even if you make your payments on time, they won’t help your credit score. Defaulting on your loan can also lead to the sale of your car, and you will lose your transportation.

Some lenders also install a GPS device on your car that can disable it if you fail to make a timely payment. This can be a serious issue because it leaves you without reliable transportation to get to work.