The Trouble with Car Title Loans is Not People Losing Their Cars
When it comes to car title loans, there is a lot of misinformation and misunderstanding floating around. One of the most common myths is that people who take out these loans often lose their vehicles due to defaulting on payments. However, this is not actually the case.
In reality, the percentage of people who lose their cars due to defaulting on title loan payments is relatively small. In fact, a recent study found that only 1.4% of all car title loans result in repossession. This means that the vast majority of people who take out these loans are able to repay them without any issues.
In fact, title loan companies work hard to ensure that borrowers can repay their loans without losing their vehicles. And even if a borrower does default on their payments, the title loan company will work with them to come up with a payment plan that allows them to keep their car.
So why do so many people have such a negative view of car title loans? The answer likely has to do with the fact that people who take out a title loan often already have a negative view of the industry. In other words, they borrow from these lenders because they can’t borrow money elsewhere – for example, at a bank or credit union – and likely wouldn’t if their situation wasn’t dire.
In turn, these customers are expecting to be exploited by the lender, which leads them to believe that any repossession is due to predatory practices rather than simply their own choice. Furthermore, since news sources only tend to cover the stories of those who end up losing their vehicle, it creates an even larger gap in public understanding about this type of lending.
However, as long as borrowers understand what could happen if they default on a car title loan, they can make an educated decision about whether or not it is the right choice for them. In fact, many borrowers who take out these loans actually go on to recommend them to family and friends in similar situations.
Taking out a car title loan may seem like a losing proposition on the surface, but with proper research and preparation, most borrowers will find that it offers more benefits than drawbacks considering their current circumstances. Furthermore, the vast majority of people who take out these loans do so without any issues at all.
- Title loans are small, short-term loans that people get by using their car title as collateral. Title loan companies provide quick cash to borrowers often with poor credit scores. Title loan holders are supposed to return the money within 30 days with high interest rates for late payments.
- Title loan repossession occurs when a borrower cannot repay their loan and misses an installment payment or fails to make their full amount repayment when it is due, resulting in termination of the vehicle’s participation in the security agreement. Title Loan Borrowers are responsible for any future installments after defaulting on their original contract. Title loans are used by people who do not qualify for conventional loans or have bad credit scores.
- The average title loan is $1,500 and has a term of 30 days.
- Title loan companies have been increasing in both number and size over the past few years.
FLORIDA TITLE offers much more benefits than drawbacks for borrowers, but many still think that car title loans are a bad idea because of misleading information like this. If you’re thinking about applying for one, be sure that you understand how Title Loans work before making your decision.