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Understanding The Loans For Title Of A Car
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Loans for title of a car or car title loans are a popular means of financing for individuals who rely on payday loans. These loans are acquired by using the title of the car as collateral. The car’s title is issued by the Department of Motor Vehicles or DMV. The deed issued comprises of the name and address of the current owner, maker, model, year of the car and also the date on which the car was sold for the first time. If the car is sold subsequently, then the car’s title is handed over to the new owner who is provided with a new title from the DMV.
So, we now know that the title of a car is actually a certificate of ownership that can function as collateral and allows the lender to sell of the car in case of a default. Loans for title of a car are targeted to those borrowers who have a bad credit and are in dire need of quick cash. Such loans are short term loans that are supposed to be repaid within a period of 30 days. The lenders are usually unregulated, small and non banking financial institutions.
There are various advantages in respect of obtaining loans for title of a car. Let us take a look at few of those advantages.
Credit history is not essential
If you want to avail loans for title of a car then it absolutely not essential for you to have a credit history. It is seen that in most cases the borrowers are individuals with bad or no credit history. This aspect disqualifies them from getting short term loans or lines of credit from banking institutions or charging the expense to their credit cards.
Short term loans
One of the major advantages of car title loans is the easy and quick availability of short term loans. Many of the banks do not offer loans of small amounts. These loans are short term loans and can be utilized to finance any kind of expense.
Loans for title of a car also come with certain disadvantages. Here’s taking a look at few of those disadvantages.
High rate of interest
It is advisable to beware of car title loans as they come with a high rate of interest. In fact, these loans set off an endless cycle of debts. The high interest rate is due to the lenders who are hell bent on making profit regardless of whether the borrower repays the loan or defaults. The rates of interest are so high that the normal borrower often finds it impossible to repay such a huge amount.
Losing the equity on the car
The borrower often loses the equity on the car as many times he is unable o repay the loan amount.
Rollovers and fees
The loans for title of a car come with many fees that profit the lender. If the borrower is not able to pay on the due date then he is liable to rollover the loan which again entails more fees.
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