Title:
Title Loans Backed by your Vehicle is a Good Instant Loan Option
Word Count:
624
Summary:
Title loan is a good source of funding your instant requirements. It is like a secured loan where repayments
are backed by the borrower’s title to his automobile. Title loan is repayable in a short period such as a
month. The prime drawback of title loans is that the interest charged on them is very high. The following
article gives more important information about title loans.
Keywords:
Personal Loans, Bad Credit Loans, Debt Consolidation, Title loans
Article Body:
Title loan is very famous among the residents of the UK as a loan for a short term. Add to this the
instantaneous approval that borrowers can have, and title loans form the best available option.
A title loan is a secured loan with the title to the automobile serving as the collateral. The use of automobile
as collateral is not limited to title loans itself. Many lenders accept the automobile as collateral to back the
loan repayment. However, home reigns supreme in the preferred list of collaterals. Vehicle or automobile,
which is considered a secondary asset in secured loans, is used specifically to back title loan repayments.
The loan provider retains the title to the vehicle and not the vehicle itself. The borrower thus has the
freedom to use the vehicle in the manner he chooses, provided efforts are made continuously to keep the
vehicle in good condition. A basic prerequisite for the loan is that the borrower must have a clear title to the
loan. The borrower will be required to provide documents proving the ownership of the automobile at the
time of approval of loans.
In regular loans, borrowers have to wait for several days for the loan to be approved. Title loans are
different. Within 30 to 45 minutes of the application, you can find your title loan application fully processed.
Thus, title loans are also used as instant loans.
Borrowers who are wearied of the large number of refusals will find title loans different. No credit check is
required for the approval of title loans. Bad credit people will find these loans especially helpful because it is
only in this loan that they will not be treated on dissimilar terms. Bad credit scores owing to County Court
Judgements, Individual Voluntary Arrangement, etc. do not count much in the approval process.
Title Loans have a sizable positive effect on the credit status of the borrower.
For approval of title loans, a borrower needs to present his/her pay stub, four personal references, and a
verifiable address proof. As soon as these documents are presented, the loan can be sanctioned for use.
As mentioned above, title loan is a short-term loan. The term of repayment may be about a month. Similar to
other short-term loans, the rate of interest chargeable is very high. The annual rate percentage counts up to
300% - 900%. This is an expensively high rate of interest.
Inability to pay the title loan in the month it is due, will require payment along with interest. In the
subsequent month, the borrower will have to pay double the amount that was actually due, plus the interest
for the first month. This is because interest in the second month costs equal to the actual amount.
There is a fear of being trapped in title loans because of such an expensive rate of interest. For instance, if
the borrower fails to pay the title loan in the specified repayment period and the following months
repayment burden doubles, the borrower will choose to repay only the interest. This means that the principal
is again carried over to the next month. Once again, the borrower will accrue an interest equal to the
principal. This becomes a vicious cycle, making it difficult for borrower to extricate him/her out of the
quagmire.
Borrowers can however, minimise the drawbacks of the title loan by discussing in detail the entire
methodology of title loans. The various issues involved in title loans must also be discussed, especially the
provisions related to expensive rates of interests. Borrowers must decide accordingly if the urgency of the
need is dire enough to accede to such higher rates of interest.
Credit Dispute Letter