You will come across many misconceptions and myths about any topic to start reading on the Internet. The internet is certainly one of the greatest inventions ever, but at times it is difficult to distinguish truth from falsehood because every man on the planet has access and can write anything. Everything related to the different types of loans is no exception. Of course, this is not good at all, because due to incorrect information or half-true, you may think that you are not eligible for the loan, which you need at that moment. Or you will give up because you read that the interest is too high and the like. Car title loans are one of the best short term loans and can help you in a lot of different situations. It is accompanied by a lot of misconceptions, but we will help you today by telling you what are the most common myths so that you do not believe them.
- What is it?
- Most common misconceptions
- 1. You will not be able to use your car until you repay
- 2. It will positively affect your credit score
- 3. A bad credit score will prevent you from getting a title loan
- 4. The interest is unrealistically high
- 5. Penalties for early repayment
- 6. You will easily lose the vehicle
What is it?
It is usually a loan of a small amount of money with a very short repayment period. It often happens that only a month is the repayment period, so it is clear to you what amounts clients usually want. It serves primarily if you urgently need a small amount of money, which you know you will be able to repay soon, but you just don’t have it at the moment, and you need it. And why is it called a car title loan? It is because your vehicle, usually not necessarily a car, serves as collateral. What can be a drawback is that it can be very expensive. But that depends on many factors that are not the subject of our article today. So let’s start debunking myths.
Most common misconceptions
1. You will not be able to use your car until you repay
Many think that since the cars serve as collateral, then they will not be able to use the car until they pay off the full amount. That, of course, is not true. That misconception has remained since a few decades ago when it really was the case because only pawnshops lent in that way. But that is no longer the case. Lenders leave you your car because they know you need it, and they will only take it if they fail to repay. If your lender still asks for your car keys, then absolutely look for another one. All you will need is a pink slip and to be employed and you can get the money, and your car will stay with you. If you visit here, you will see that title is without a lien on it. People also think that it will be necessary to drive the car for a technical inspection, but just a photo of the chassis number, model, and mileage is enough.
2. It will positively affect your credit score
Many have tried to manipulate their credit score by taking out a title loan, repaying it on time, and thus improving their credit score. But that is not the case in 99 percent of cases. Lenders almost never report to the competent agencies that you have repaid the debt on time, which means that the agencies will not be informed at all that you took the money and then repaid it on time. So you can’t manipulate your credit score that way. On the other hand, be sure that if you do not pay on time, then the lender will surely inform the credit score agency, and then it will have a negative impact on it. So don’t try to trick them that way. Visit here to know more.
3. A bad credit score will prevent you from getting a title loan
This is by no means true because this type of loan is intended for those who have nothing else to offer as a guarantee other than a vehicle. That is why the lender will not check your credit rating or your credit histories, such as the accuracy of paying installments and the like. They just need confirmation that you own the vehicle and that’s it. Now, of course, all this will make the interest rate higher, because the lender is taking a higher risk precisely because it does not check your credit score. But the bottom line is that you don’t have to worry if you have a bad score.
4. The interest is unrealistically high
We are not going to lie to you and say the interest rate isn’t high, but it’s certainly not sky-high. It will certainly be higher than what you are used to if you took another type of loan, but the reason is, as we have already said, a higher risk taken by the lender. However, if you research the offer well, you will surely find several lenders who are asking for a very realistic interest rate. The fact that the interest rate is higher than some others does not mean that it is not realistic, and it is certainly lower than, for example, a payday loan.
5. Penalties for early repayment
It is not at all clear to us where this misconception came from. The concept of this myth is that if you pay everything earlier, you will still have to pay penalties. Every lender will accept early repayment, so if you have money available, do it now.
6. You will easily lose the vehicle
Many people are afraid that just one delay in payment will lead to the loss of their car. But that is of course not the case because if for every missed installment, they seized the car, no one would ever even take a title loan. And it pays off more for lenders if you repay the entire debt with interest. It is only important that you inform them that you will be late and explain the reasons. Then you will always be able to reach an agreement.
What is important, of course, is that you take money only from respectable lenders. They will not deceive you and you will always be able to make an agreement with them, and they will take your car only if you say that there is no chance to repay the debt.