Did you know that there is more than $24 billion worth of demand for the services of loan brokers in the United States alone? It makes sense that there is so much demand for these services when you account for the fact that the vast majority of people in the United States have at least some debt. More than 70,000 people around the country work to keep up with the huge demand for loan brokers.
This is also an indicator of how huge the market for title loans in particular is. Because of how enormous the title loan market is, there is an enormous variety in the quality of loan options available.
People who find the best title loans around end up with lower interest rates and much more straightforward fee structures. People who end up with some of the worst loans in the business end up paying much more than necessary. So what do you need to know about title loans to help you find the best options for you?
Read on to learn all about the most vital steps to take as you are getting a title loan!
1. What Is a Title Loan?
In brief, a title loan is a loan in which the debtor receives the loan amount and uses the title of their car as collateral to back that loan. If the borrower is unable to pay the loan back, then the creditor can take possession of the vehicle to make up for it.
Another thing to understand about title loans is that they often have short loan terms. The majority of title loans theoretically end after only 30 days. Once those 30 days are over, you will need to pay back the total amount you borrowed plus whatever interest you agreed to.
However, most title loans also come with rollover agreements. That means that you can continue to delay paying back your full loan amount until you are prepared to do so. However, the longer it takes you to pay back your title loan, the more extra fees and interest payments will stack up.
That is why it is essential to be prepared to pay back your title loan.
Many people consider title loans because they do not have that many other options for loans. In fact, that is one of the best things about title loans. They are available to almost anyone who has a car even if they do not have access to other loans.
On the other hand, that means that people who are looking for title loans are sometimes in a rough financial situation. If they end up not being able to make their payments, then the prospect of losing their vehicle can be devastating to their financial health.
That is why it is so important to make sure that you take the right steps to find the best possible title loan options for your situation.
2. Getting a Loan With Better Terms
We will later discuss how you can read through title loan options to make sure that you are not getting a worse deal than you realize. We will also talk about how you can look through a wide variety of loan options so that you can find the best options available for you. However, comparing options will only take you so far.
The kinds of loan offers you get will be determined by your financial health practices. For that reason, it is often a good idea to invest as much as you can in your financial well-being before getting a title loan. That way, you will have better terms for your loan and it will be easier for you to pay it back.
That can also minimize the chance that you end up defaulting on your loan and have to give away your car. So what can you do to make sure that you get the best terms for your loan possible?
3. Increase Your Credit Score
Some institutions offer loans based on nothing more than the single number of your credit score. Of course, you can get a much clearer idea of someone’s financial health by looking at many other factors along with their credit score. However, the credit score may be the single most informative number for assessing how likely someone is to be able to pay back a loan or not.
That is because your credit score is supposed to summarize your whole financial history. Because credit scores are designed to measure your financial history, there is only so much you can do to improve them. At the end of the day, the best way to increase your credit score is to consistently pay back your debts and look after your financial health.
This process can take a long time, so you might not be able to increase your credit score by that much if you need to get a title loan right away. On the other hand, if you can wait a few months or more, then increasing your credit score can help you find much better title loan options.
There is one fast way to increase your credit score that might be able to make a difference within a week. Some people have a few old debts that have gone to collections. In such cases, those debts act like anchors that keep your credit score down.
However, they also act like anchors in that if you pay them off, your credit score will go right back up again. At the very least, consider finding out if you have any old debts in collections. If you do, keep in mind that paying them off can have a disproportionate effect on your credit score.
4. Find a Cosigner
If you can find a cosigner, you may also be able to receive a title loan with better terms. Cosigners adopt the responsibility of covering your debt if you fail to do so. For that reason, you will need to find someone who trusts that you will be able to pay back your title loan debt.
5. Consider Other Types of Loans
If possible, it might even be better to find someone you know to offer you a loan with your car as collateral. There is a good chance that the people you know will offer you much better terms for your loan.
On top of that, the people you know can assess your financial health based on their personal knowledge of you rather than using something like your credit score. If your credit score does not capture your reliability, then those who know how trustworthy you are may be the best source of loans available to you.
6. Consider Many Title Loan Options
Once you start pursuing a title loan, you should make sure to look at many different options. Sometimes, you can find many options at a single loan provider. However, you should also look at the options that other providers are offering.
The more options you consider, the easier it will be for you to find a loan that offers you acceptable terms. For this reason, it is often a good idea to ask every loan provider you speak with about where else you might look.
If you are speaking with a loan provider in person, remember to also look for options online. Consider looking for communities online where people discuss title loans.
You can often find groups on Facebook or Reddit where people discuss niche technical matters like this. Some of these groups collect all of the most helpful information they can find to help people navigate the title loan process.
Speaking with these people can also help you clear up any misunderstandings you have about how the title loan process works. They may also be able to warn you about potential pitfalls you should avoid.
7. Ask For Title Loan Recommendations
If you know someone who has received a title loan, you might want to speak with them about their experience. They might be able to recommend their own loan provider for your situation. On the other hand, they might be able to tell you about title loan providers you should avoid.
They can probably also answer any questions you have about the title loan process. Based on the advice they give you, you might be able to find much better title loans than you could alone. However, make sure that you don’t put too much weight on someone’s recommendation unless you are sure they understand your situation.
To make sure that people can give you helpful advice, consider sharing with them some of the details of your situation. Otherwise, people might recommend that you get a title loan from the best provider for their own situation rather than from whoever the best option is for your situation.
8. Look Out for Deals That Seem Too Good to Be True
Once you are looking at your title loan options, be careful about deciding which option is the best choice. Some loans seem amazing when you only look at one or two aspects of them. The less favorable stipulations of some loan agreements are not apparent until you look closer.
If a deal seems too good to be true, remember that it may have another term that makes it much worse than it seems.
9. Check More Than Your Monthly Payment
Everyone who gets an auto loan focuses on the monthly payment amount. However, you should also calculate how long it will take you to pay back the principal loan amount.
If you are positive that you can pay back your loan after the first 30 days, that is great. However, if you think it will take you several months, then make sure you calculate how much extra you will be paying back because of that delay.
Some loans offer tiny interest rates to attract people to agree to them. Then, they come with huge rollover fees. These loans depend on the fact that some people miscalculate how long it will take them to pay back their loans. If you miscalculate badly enough, you could even end up paying back more than double the amount you borrowed.
Make sure you understand how much your loan will cost you if everything goes according to plan and also how much it will cost you if it takes you longer to pay back than you expect.
10. Get a Title Loan With Clear Fees
Some auto loan providers stuff their title loan agreements with hidden fees. When you are speaking with a title loan provider, ask them about anything that might increase your total costs.
Once they have given you their answer, ask if there are any other fees or anything else at all that might increase your expenses. You can continue to repeat this question until they assure you that there are no other fees that you don’t know about.
When you are considering auto loan providers, you can also look at reviews from other borrowers. That can help you decide which provider is right for your situation.
Understand What You Should Consider Before Getting a Title Loan
There is a lot to understand when you are getting a title loan. However, making sure to go through all of these steps will make it much easier for you to find the best title loan for your situation. It is worth putting in the time to make sure that you get the best deal possible to protect your financial health.
To learn more about where you can find the best title loan options available within 10 miles of 65801, reach out and get in touch with us here at any time!