A title loan which can also be referred to as car title loan is a type of loan where the borrower gives his car as collateral in exchange for money. It is a short term type of loan that has to be repaid within a period of thirty days. It has become an increasingly used service and has gained popularity among many nations. However, it should be noted that title loans charge very high interest rates administering as steep as triple valued Annual Percentage Rates which is extreme compared to other types of loans. They are perhaps preferred because it is a quick way of accessing cash.
The procedure is actually very fast and simple. The borrower simply approaches the lender where he or she gets the information on the terms and condition to apply as well as the interest rate to be charged which depends on the amount of money to be borrowed but most importantly on the value of the car to be provided as collateral if the borrower is still interested, he shows his approval and the lender then goes ahead to verify if the borrower is viable by checking whether he has all the requirements. Once it has been ascertained, the two then enter into a contract where the borrower signs a contract as proof of their agreement. The borrower is then issued the money in return.
A title loan just like any other service has its pros and cons which is why it is highly advised that a person researches about a service before entering into agreements. This reduces future regrets and inconveniences.
Advantages of title loans
1. It is a fast way of receiving cash.
Despite its extreme rates, title loans are still a preferred service because the approval period is generally short with some agencies taking as short as fifteen minutes to approve the loans. It is suitable for desperate situations where funds are required within short periods of time.
2. No financial background information is required.
This is very helpful for people with negative credit status. It gives them the chance to still borrow funds without discrimination.
3. The most promising factor is that on completion of payment of the loan, the borrower gets to keep his or her car. This is what motivates the borrower to work harder to complete the payments.
Disadvantages of title loans
1. You must have a car to be viable for the loan approval.
The title loans only apply to people in possession of a car. Those without are simply not eligible which is a great disadvantage.
2. Failure to repay the loan on the agreed upon time leads to the repossession of the car.
The repossession highly affects the borrower because the borrowed amount is by far less than the actual value of the car which is a great loss to the borrower.
3. Extreme interest rates.
Title loans charge very high interest rates which most people might not be able to comply with.
Title loan Houston is an example of the existence and application of title loans. Houston is the largest city in the state of Texas and the fourth largest city in the United States of America. It was founded in 1836 and was named after San Houston, a general who participated in the battle of San Juan and was then elected as president in 1836.
There are numerous agencies in Houston that offer title loan services and they can be sourced from the internet, journals, magazines, newspapers, the audio and visual media, posters and by word of mouth among others. One can then choose from the one they feel will most suit his or her needs.