Auto title loans rank as one of many different types of loans that adult Americans have nowadays. Most major purchases or procedures, from attending college to buying a home or a car involve getting personal loans, and different loans have varying interest rates and other conditions attached to them. Debt is a fact of life for most adults today, and there exist many different routes for getting a loan for different amounts for different reasons. A cash loan can or a same day loan can be the result of visiting a car title loans location, and someone looking to get auto title loans should know what he or she is getting into before taking out a loan of this type.
Debt in the United States
Loans are nearly universal among adult Americans, and car loans are among the biggest reasons for borrowing money. In fact, as of the year 2017, Americans collectively owed $568.6 billion in car loans, and in that same year, on average, Americans borrowed $31,099 for financing a new car. Overall, as of 2017, auto loan debt alone constituted an entire 9.03% of the total American debt balance, a considerable share. Vehicle loans also lead the list of reasons why Americans borrow money at all. Paying for vehicle expenses is first at 31%, followed by paying bills at 26%, and personal emergencies third at 21%. Personal loans can vary in amount as widely as $50 to $200,000, although the average is closer to $7,576. Today, a record-setting number of Americans are currently paying off auto loans: 107 million, and different avenues exist for getting loans today. Getting loan money may involve making use of one’s car title at auto title loans locations. How does this work?
Auto Title Loans and You
Auto title loans involve a prospective borrower taking his or her car and its title to any car title loan location and filling out an application (this process does not require proof of income or credit score examination). The loan can be completed in as little as half an hour, and the borrower is free to leave with the money while the lender keeps the car title as collateral until the debt is paid, which makes this a type of secured loan. such loans offer cash on the same day, varying in amounts from $100 to $10,000, and the APR can be expected to be very high, according to Nerd Wallet. Lenders are taking a risk; if they cannot pay back the loan on time, they may lose their car, and it is believed that this happens to around 20% of all people who take out auto title loans.
Such loans can be paid back either in lump sum or installments. In the former case, the loan must be paid back within 30 days in one lump sum, often with an APR of 300%. And in the latter case, installment payments are paid in installments, hence the name, over a period of three to six months with an APR of about 259%.
Another risk of taking out auto title loans is the possibility of needing to renew the loan several times; in a majority of cases, borrowers will renew their loan several times, sometimes seven or more times, and this can create a cycle of debt, made worse by the fees that are paid every time a loan is taken out. Borrowers should make sure that their finances, such as income and emergency money, are all carefully managed and accounted for before any such loan is taken out. If a borrower decides that an auto title loan is the best route, he or she can search “vehicle title loans near me” and find the address and name of a convenient location in their town or city, or even a neighboring town. The buyer of a new car is instead urged to use more traditional routes for financing his or her new vehicle with much lower interest rates, and another option for new car buyers is to instead lease a car, especially if a car is only going to be used for a few months of years instead of a lifelong investment. Some auto title loan location may not accept the titles for leased cars, however.