What is a Title Loan?
When you’re evaluating loan options in Orem, people will commonly find different short-term solutions, including payday loans, cash advances, and title loans. In this case, we want to explain what is a title loan and what are the advantages and disadvantages. A title loan isn’t something we currently offer at Liquid Loans, however, many of our customers have used title loans in the past and prefer working with us on our installment loans, they’re easy to qualify for and the terms and conditions are reasonable.
A title loan is a short-term loan designed to help vehicle owners have access to money. In order for a borrower to qualify for funds, they must own their vehicle outright (no car payments remaining), and have access to their title which they can provide to the title loan lender. In addition to the vehicle title, a legal identification, registration, proof of residency, income, and auto insurance proof will likely be required. Depending on the lender, some may even require the vehicle keys or before funds are transferred, may install a GPS tracking device on the vehicle.
The amount someone can borrow with a title loan is dependent on how much the vehicle is worth. In general, the loan is no more than half of the vehicle’s current value.
What is the downside of a Title Loan?
A title loan is considered a short-term loan, typically a 2-4 week term. These type of loans will generally carry a significantly higher interest rate , or annual percentage rate, much higher than a Liquid Loans personal loan.
To provide an example of how expensive a title loan can be, a $2,000 title loan with a 25% monthly interest rate will come to $500 in interest within a month. So in addition to the principal borrowed, interest rate charged, and other additional fees, it can add up quickly. The other downside is, the vehicle is held as collateral. If a borrower runs into any issues with repaying the loan on time, this can lead to the vehicle being repossessed. In other words, not only will you owe all of the money borrowed plus interest and fees, but you will now be without a vehicle.
What are alternatives consumers should consider before using a title loan?
Before you decide to an expensive, and risky title loan, we encourage you to explore the Liquid Loans options. We have a quick online application system where you can get pre-approved for up to $3,000 with no credit check needed at all. An installment loan is a great alternative to a title loan, the rates are better, and there is no risk of losing your vehicle should you run into an emergency situation. Sometimes people are hesitant to apply for a loan because they may have a bad credit score or no credit history. Our goal is to help our customers financially and get into a position where they can start to build credit history. Our team is ready to answer any questions you may have, call us today at 801-607-1568, or apply online here, our store is just off of State Street and University Parkway in Orem; 1088 State St, Orem Utah, 84097.