One of the most common apprehensions that borrowers get while borrowing a car title loan from the lender is “what will happen if I am unable to repay on time?” The general answer to this is that you can borrow the money for another thirty days, in other words, “rollover”.
Roll Over Your Misconception
The point is not what a “rollover” is all about, but to understand that there is nothing to get scared of the word itself. Rolling over means you will have to pay another monthly fee. You can rollover as long as you want but do not arise to negative conclusions. Most people have a particular misconception regarding car title loans. They think that this is just a trick to take away your vehicle. This kind of thought arises due to malpractices performed by some dubious loan providers or due to misinformation regarding the form of financing.
First of all let’s get it straight. Car Title Loans are not like conventional loans. They are the last option that a person should resort to when other options fail. Furthermore, this type of loan is advantageous when compared to other forms of loans. Traditional loans maintain strict terms and conditions. This makes it difficult for borrowers when it comes to urgent requirement. Also, banks tend to cut down credit facilities while the interest rates are increased during a fall in the economy. This leads to difficulty in obtaining the loan easily and at low credit rates. It is these factors that led to the arrival of car title loans, where loan lending and return terms and conditions are made easy. In fact, what makes it stand out from others is that people with bad credit history and bankruptcy can also apply to these Car Title Loans.
Breaking Your Myths
As mentioned before, car title loans are not “Rollover” entrapments. So do not run away when you come across “Rollover”. There maybe some companies who indulge in such malpractices, like preying upon some of the borrowers due to their inability to repay the agreed loan on time. But, this alone should not be the base of your judgement. Research which company can be the most trusted. If you are borrowing from a legalized company, then there definitely does not arise the possibility of falling into any kind of blind trap.
2. Risk Of Higher Rates
You may have heard, that car title lending industries charge higher rates than the average market rate. Some people spread the word around that higher rates are a trick to prevent the timely payment made by a customer. Thus, arising a situation where the loan will be inevitably ‘rolled over’ several times, amounting to a digit beyond the capacity of the borrower to repay, which will ultimately lead him/her to surrender his/her car.
The reason behind such higher rates is because car title loans are provided for a customer- definable period to high-risk borrowers. The companies also provide a flexible period for the repayment of the loan, along with a fraction of paperwork and verification that are associated with any other form of lending. Some companies do not even recognize ‘Universal Default’- where credit companies increase your APR to Default APR just because you have a negative credit history or have failed to pay your loan on time with your previous lender.
3. Fund After Confirmation
There is absolutely no reason to worry about as before you sign a car title document, you will be given a brief related to actual rate, monthly payment amount, date of loan repayment and the conditional terms by the credit specialist prior to funding. No loan will be sanctioned without your written consent.
4. Self Help Is The Best Help
– Evaluate various car title loan plans. Ask about the penalty clauses and date of extensions. Some companies provide flexible payment structure or minimal penalty rates.
– Read the documents thoroughly. You may unearth some unexplained clauses related to payment schedule.
A final message – always take loans under circumstances of financial crisis.
Cayla Silverstone, a self-professed financial geek, she is a freelance journalist when it comes to profession. She has over 10 years of expertise as a pink reporter. It was during her finance classes that she discovered the amazing truth that car title loans are not that much complicated. Since then she has started to spread the word.