In need of some quick cash? If so, you may want to consider a short-term loan via using your car as collateral. This is known as a car title loan. If you decide to apply for one of these loans, the moneylender places a lien on the title of your vehicle. If you fail to make the payment, then your car is repossessed by the lender.

There are both good and bad consequences that can transpire from car title loans. And in this article, we will be looking into those advantages and disadvantages.

Pros of Car Title Loans

Car title loans generally follow a very simple procedure when it comes to the application process. There is no long, complex, and drawn out set of sequences required to get a loan. This is due to the fact that you’re providing collateral in the form of your vehicle. This makes the application process easy and effortless, even if you have a poor credit score.

As long as you can prove that you have a dependable source of revenue coming in, most moneylenders won’t look any further or require anything else from you.

If you are in need of money quickly, then car title loans are a great option to satiate that need. The moment the lender and yourself both agree on the specified amount of cash in addition to the terms and conditions, you will pretty much be fronted the money you need right then and there.

And lastly — and probably the best part — due to the lender having the lien on the car’s title, they don’t hold it. But rather, you can continue using it while you pay off the debt.

Cons of Car Title Loans

There are high-interest rates on car title loans. Moreover, these rates are typically much higher than what you would normally see on credit cards. And while there are states that forbid inordinate interest rates, there are others that have no regulations in regards to them.

Additionally, these particular types of loans are short-term loans. This means that the debt has to be repaid in a timely manner. If you fail to adhere to the payment structure, then late fees accrue and accumulate and will raise the overall balance. If not handled promptly, the lender has the authority to seize your vehicle.

Advice for Borrowers

While car title loans can be a viable solution when you find yourself in an arduous financial situation, it’s important to weigh out all your options before taking the plunge. This is because car title loans are generally pretty expensive. With that in mind, it would serve you well to at least look into other alternatives.

Consider taking on an extra job or asking for a loan from friends and family, etc, before taking on a loan (car title or otherwise).

If there are no other options, and a loan is the only choice you have, be sure that you fully understand all of the terms and conditions. Do your research, ask lots of questions, and don’t miss your payment. Because this will result in the moneylender repoing your car.

Options and Alternatives

Before you jump into a title loan, look at other options. You may find something that is better suited for you and your situation.

Get an Extra Job

Money comes through labour, we all know this. But yet, many seem to forget this simple principle. If you need more money, try getting a second job to supplement the expenses. This way you can get the cash you need without having to go into debt. This is by far the best strategy.

Ask Friends and Family

If you’re going to owe money to anyone, wouldn’t you rather it be trusted friends or a loving family member? At least you know that your car will be safe. However, a word of caution here. If you go this route and you do obtain the money you need, be a person of integrity and PAY them back! Nothing will spoil a good relationship quicker than broken promises related to money.

Sell Some Stuff

Do you have some extra stuff laying around that you no longer use? Have a garage sale! Gather up all the items that have been collecting dust in your home and sell them from your front yard. Or put them up on eBay or kijiji, etc. This is a great way to bring in some extra revenue, while at the same time avoiding debt.