Many people may have heard of myths, mysteries, and stories about taking out a title loan that cause them to hesitate to get one. But just like with any other business, there are many common misconceptions about title loans that are easily debunked! Financial literacy is an important life skill, and title loans are just another financial product, like credit cards or payday loans.
Here are some of these misconceptions:
Common Misconceptions About Title Loans
You need to hand over your car when you get a title loan.
This is simply not true! It’s a remnant of an old practice at pawn shops, where you would hand over your car keys as collateral for a purchase. However, modern title loan providers will gladly give you a loan and let you drive your car. They understand the need to have a working vehicle and will let you pay off a loan without ever having to give them the vehicle. Make sure you shop around for a reputable lender, like Advantage Financial, that lets you keep your car keys!
You’ll get stuck paying a huge amount of interest.
While it’s true that car title loans may have high APRs, it’s never a surprise for an educated customer. When you take out a title loan, the terms of the agreement, including the interest rate and repayment information, are all listed on a piece of paper that you must read and acknowledge. Ultimately, the only way you can have massive interest payments is if you don’t pay off the loan. It’s important to treat a title loan like a short-term obligation and pay it off on time instead of using it for long-term financial goals.
You can’t get a title loan with no credit history or bad credit.
Title loan companies are primarily interested in the collateral you can provide in the form of your vehicle. If you have a vehicle that offers more equity, you can get a larger loan. If you don’t pay back the loan, the provider needs to see how they can recoup their initial investment. The bottom line? You can get a title loan even if you have bad credit!
Even if you pay off your loan early, you’ll be drowned in fees.
This is another persistent myth! Car title loan companies are always competing for customers, and if you shop around and ask for flexible terms for early payment, you’re more likely to get them. Make sure you discuss everything with your title loan provider and educate yourself on the fees and terms of the agreement!
If you miss a single payment, you lose your car.
This is a particularly dramatic one that we hear often! However, car title loan companies wouldn’t get any business if they were super-aggressive with their repossession. Most companies can roll your existing loan into a new one and extend some flexibility towards their customers regarding payment dates.
Remember, communication is key! Talk to your title loan provider if you’re having trouble with payments or have any questions about a title loan.
At Advantage Financial LLC, we know how urgent it can be when you need quick cash. That’s why we’re ready to work with you for your car title loan. We’re a registered Credit Service Organization (CSO) with the Secretary of State of Texas. We also have the appropriate licensing and credentials with the Office of Consumer Credit Commissioner (OCCC). Plus, we have 13 years of experience serving the communities of Houston and the surrounding areas. Give us a call at (281) 410-5337, and we look forward to working with you.