Are you stuck in a difficult situation? Are you thinking about getting a loan? Well, slow down! Getting loans can be tricky if you only want it for a short time. The best solution to such issues can be getting title loans in San Jose. These loans are known to be short-term and high-interest loans that need your car as collateral to get or borrow money.
If you have unsatisfactory credit and are looking for places that can accept low credit as well as sparse credit history then this can be the best option. Title loan holders don’t get deeper into credit history. However, before getting into it you should be fully aware of it.
Know thoroughly about title loan
It is a secured loan that allows borrowers to use their vehicle or car as collateral. After the car of the borrower secures the loan repayment, the lender repossesses the car in case you don’t repay the loan at the right or decided time.
Title loans are known to be short-term as well as high-interest loans which require only minimal things. In case you have low credit even then you are eligible to apply for this loan. There are many title loan cases where credit score or history is not taken into consideration.
What is the working of title loans?
Before applying for an auto equity loan, it is essential to know its working as this will help you to be on the safer side. You can opt for a title loan via a lender that provides a title loan as long as the ownership of the vehicle is held by you. Plus, you should have a lien-free car title. While completing the documentation of the title loan, it is essential to show your car to the lender as proof of ownership including your license.
After getting approved for the loan, you need to give the car title in exchange for the title loan. The lender determines the entire terms of the loans and has terms of 30 days which is equal to payday loans. In other words, you need to make a big payment at the end of the loan period. The payments need to be made on the amount borrowed along with interest and fees.
Many lenders go for a monthly fee of 25% of the total loan amount which leads to 300% APR. This can get complicated within a short duration and there can be chances of losing the asset if you are not interested in paying it back on time.
How much can be borrowed with the title loan?
If you seeking title loans San Jose then the limit of the loan can be between 25%-50% of the total value of your asset. However, it is in the hands of the lender to decide the worth of your car. Some loans can be low as $100 whereas some title loans can go up to $10,000 and even more.
What is the right time to get title loans?
As per Consumer Financial Protection Bureau, around 20% of the borrowers get their car seized because of their inability to repay the loans in full. The lenders of car title loans make the business off of the borrowers who are continuously taking new loans to repay the old ones. Most auto equity loans in San Jose become long-term debt along and more than 2-5 auto loans are taken because borrowers are unable to repay the full amount in one go.
However, the right time to take title loans depends on your choice and need. There is no such fixed or accurate time to seek title loans. But try to get them from good lenders or companies that are trustworthy and reliable such as Car title loans in California.
Advantages and disadvantages of title loans
Before stepping into the world of title loans, know about the advantages and disadvantages of it so that you can make the right decision:
Advantages –
- No checking of credit history – Most title loans do not require your credit history. This can work in your favor and allow you to get easy money when you have exhausted other loan options. There is no need to have a great credit history to be qualified for title loans.
- Quick approval and easy access to funds – The one advantage of title loans lead to another one which means it takes only take limited time for the lenders to check the application as well as the vehicle. After getting everything approved, you can get the funds immediately or within a few days.
Disadvantages –
- Debt trap – More than half of the auto title loans lead to a big burden that borrowers are unable to get rid of. In other words, borrowers keep taking new loans to get rid of the previous ones. This starts a vicious circle or debt trap that is hard to get out of. Keeping yourself in debt for months and years can be very harmful.
- Fear of losing the asset – San Jose title loans come with the fear of losing your asset which puts you in an easy state. This can lead to a big burden and even handling over the car if unable to repay the loan.
- Short repayment terms – Title loans mean repaying it within 15-30 days. If compared with traditional loan options that have repayment terms of 6 months to 3 years depending on the borrowed amount. The repayment period is not enough to get back the funds and repay the loan along with the high APR.
Alternatives of title loans
It is better to know about the alternatives as well. Getting yourself filled with complete knowledge about car title loans will only work in your favor. Here are other options that title loans:
- Payday alternative loans
- Personal loans
- Credit cards
- Friends and near ones
Conclusion
It is a big decision to seek a loan during tough times. No wonder, getting a loan on your asset is the safest option and can lead to various benefits. However, be aware of its drawbacks as well so that you don’t lose your asset.
