There are some folks out there who are wondering exactly how car title loans work. Many of them perhaps are holding the title for their cars and things are happening in their life where they need money.
Perhaps they need to get their child enrolled in college, or maybe their roof needs repair and they are a little bit short. These are all good reasons for needing some extra cash.
A potential borrower goes to his bank or lender with only his car and the title for his car. The bank evaluates value of the car and offers up a loan that is basically a percentage of what that car is worth. Data says the average car title loan is around $1,000. When it is all over, the borrowers has the money he needs and the bank holds the car title as collateral until that loan is paid back in full.
If you notice, this process turned out to be a win-win for both parties. The borrower is very grateful that he or she was able to attract more prosperity into their lives, and the bank is able to earn more money from the loan – and the risk of the loan is minimized as they loaned a little less money than the car is worth.
Two Types of Car Title Loans
Unknown to many, there are actually two types of car title loans. There are the short term single-payment loans where borrowers must pay back in one lump payment. These are typically due in 30-90 days later. And there are the more standard installment loans, where borrowers make more than one payment over a longer period of time.
Be Careful with these loans
The one thing that borrowers need to consider before agreeing to one of these car loans are the terms of the loan. You must be careful and ensure that you understand what is expected from you and consider how much you will be required to repay over the loan’s duration.
These types of loans usually come with higher interest rates than what is offered with a loan for a new car. This is understandable – as the risks are higher – but makes sure the rate they want to charge you is fair and a rate you can live with.
Alternatives to These Loans
Sometimes there are other options that are cheaper and will not cost you as much as a car title loan. For instance, let us consider the story that surrounds Carl. He was a struggling online marketer who needed to raise money for a new advertising campaign on social media.
Carl did have a nice Buick that was only a few years old, but he owed no money on it. He thought long and hard about borrowing the $4000 that his banker offered him for a title loan.
However, one of his friends had successfully raised over $10,000 online through a funding webpage. This gave Carl the idea of running a similar page to find online partners for his social networking endeavor.
Experts and positive thinking gurus are forever urging people to find alternative ways to attract the money you need into your life. When we try to maintain the proper wealth and prosperity mindset – it becomes no problem to raise the money we need.