Title loans are easy to secure and sometimes have generous repayment options available. Not everyone understands why a title loan might be necessary.
The reality is that these types of loans serve a very important purpose. There are several reasons why a person might need a title loan.
A Financial Emergency Occurs
One of the main reasons people might need a title loan is if an emergency occurs that requires cash right away. This could be a sudden medical or dental expense. It could be a home repair that is needed immediately so that everyone inside stays safe.
Raising the money for these emergencies with no notice or finding financing through traditional banks is often impractical or impossible. The loan provides money fast so that emergency expenses can be paid immediately in order to prevent problems.
Access a Bonus or Payment Early
There are times when it would be helpful to not have to wait for a large bonus check from a job or a payment from a legal settlement. A car title loan provides an easy way to access this money without have to wait for the actual payment. Anyone with a stable job or income can get a loan for the same amount and then pay it back slowly until the bonus or settlement money arrives.
This can make it easier to plan a trip, take care of home improvements or pay bills without having to wait for the bonus check to arrive.
Traditional banks today have very strict requirements for people who want a loan. Even a small issue on a credit report could make these types lenders inaccessible. Many people need an auto title loan because credit checks are not necessary for approval.
The loan is backed by the car attached to the title. The lender does not even bother to run a credit check in most cases.
Title lenders look at other things like the value of the car and the income of the borrower in order to determine the terms of a loan.
Prevent a Repossession or Eviction
The threat of eviction, foreclosure or repossession is a reason to get a title loan today. A late payment because of unexpected bills or other unplanned issues could cause a person to lose an apartment or house. A late payment might even result in some asset being repossessed. These situations can create serious problems.
Auto title loans can fix the problem. The loans are approved fast enough so that it is possible to make an expected payment on time to prevent eviction or repossession.
Refinance a Loan
An auto title loan might be needed to help refinance a loan on a car. Some lenders like VIP Finance of Texas can offer loans for as little as 6 percent interest.
Some drivers have loans for a car with much higher rates because of previous market conditions or a dealer with bad financing options.
The title loan lender can pay the original loan and then issue a new one at the lower interest rate.