Car title loans are a common way to get quick cash for the value of your car. But because of this, there are a lot of rumors and misconceptions about how they work, and whether or not they’re a good choice if you need cash to cover your emergency expenses. So in this article, we’ll take a look at a few of the most common misconceptions about car title loans, and why they’re wrong. Let’s get started.
- I Have To Give Up My Car Or Keys To Get A Title Loan
This is not true at all. When you get a car title loan, all you give to your lender is your car title. This document is what proves the legal ownership of your vehicle.
Basically, the lender legally owns your car until you pay off your loan. But that doesn’t mean you can’t keep your keys or drive your car. As long as you continue to pay off your loan and it’s in good standing, you will keep your car and can use it just like you normally would.
- All Car Title Loan Companies Charge The Same Fees
This is false. Just like any other kind of lender, different car title loan companies charge different fees based on their business model, the value of your car, and other such factors. If you want to get the best rate on a car title loan, it’s best to shop around!
- Car Title Loans Penalize Early Payoff
Most reputable title loan companies do not have “prepayment penalties” that charge you a fee for paying your loan early. Unfortunately, some do. This is why it’s important to only work with reputable lenders, and do your research – ask your lender about prepayment penalties before you sign any loan paperwork!
- Car Title Loans Are Really Expensive
While car title loans do have higher interest rates than most other types of bank loans, they are not as expensive as you may think. Payday loans can be even more expensive than car title loans – with interest rates that are more than twice as high.
However, it is true that car title loans can be an expensive way to borrow money. That’s why it is very important to do your research, explore other options, and determine whether or not a car title loan is right for you.
- Bad Credit Will Stop Me From Getting A Title Loan
This is false. In fact, car title loans usually do not require any kind of credit check. Because your vehicle is used as collateral for your loan, your credit score does not matter – and you can get the cash you need even if you have bad credit or no credit.
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Hopefully, this article has helped clear up some common misconceptions about title loans and how they work, and will help you determine if a car title loan is a right choice for you.
If you need an emergency loan, a title loan may be a great option – but make sure you take the time to consider your personal finances and situation before you apply, to ensure that you are making the correct financial decision.
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Brian Allen
Editor-in-Chief
Brian Allen has been helping people make smarter financial decisions for over 10 years. As the Editor-in-Chief for Goloans, Brian writes about sage financial advice, “how to” articles, and reviews about lenders and creditors.
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