Car Loans and Title Loans
It may seem odd to secure car loans by means of a title loan, but for many consumers this is a viable option. Many families need two cars to get by. Oftentimes, one car is new, in good condition and suitable for long commutes or trips and the other is a used model only employed for short trips and getting around town. Some used vehicles can be purchased for very low prices, sometimes under $1,000. Ironically, this can present something of a problem for some would-be purchasers.
Car loans are typically written only when there is a certain amount of financing being taken out, that amount being determined by what is profitable and useful to the lending agency. Many of these companies will not lend sums less than $1,000. When a family needs, frankly, just a better car to get around, there is no sense in taking out more financing than what is needed to get the vehicle. In fact, where borrowing is concerned, it's usually best to take out the least possible amount of money to lessen as much as one can the amount of money that goes toward paying the interest on the loan.
A title loan, in this regard, can serve the same role as car loans. These loans typically do not entail a credit check—though some lenders may take this additional step—as the borrower is offering collateral. Because the ceiling on the loan amount is usually around 50% of the resale value of the car being used as collateral, the lender is assured that the customer is not likely to default and that, even if they do, there is a means for them to recoup their costs. It also means, for the consumer, that they may be able to secure funds that would otherwise be out of their reach were a traditional credit check required.
A auto title loan used in place of traditional car loans offers other elements that lessen the stress of borrowing, as well. These loans are typically very short-term, meaning that the consumer isn't left with debt hanging over their head for a relatively small purchase. They can usually be rolled over if the debt cannot be paid by simply paying the interest on the loan, thus allowing the borrower to extend the terms if money doesn't come in as quickly as they had anticipated.