Being in the position where you need a title loan is not ideal. It means you have an urgent cash need that cannot be met with other options. It could be for a car repair, home repair, medical bill, or any other unexpected cash flow shortage.
Car title loans serve an important purpose for their customers and often help solve short term financial problems. Unfortunately, more than a few lenders take advantage of customers that have very few options and a time sensitive need. These lenders end up causing people more problems with a very high cost loan and even vehicle repossession.
Find a Decent Car Title Lender
To avoid a title loan that causes problems instead of solves them take some time to find a reputable title loan company. This can make the difference between having a god experience and a bad one. This is more important today with the addition of more online title loan companies. To find a decent lender you will need to do some research.
Car Title Loan Company Reviews
Reading reviews of any company you are about to do business with is a good idea. This can also be a starting point for finding a decent title lender. However, for some car title loan companies this can be more complicated than simply visiting a review site. There is a tactic where some lenders “ask” customers to fill out a review prior to funding their loan. Since most customers are in a hurry to finish their loan process and get there funds, they usually fill out a positive review. This is not an accurate assessment of the title loan company.
To find accurate reviews of the lender search multiple review sites. Also check if the company has had any issues with the Better Business Bureau or has had anyone report them to Ripoff Report.
How to find the Best Title Loan Company
Finding the best title loan company may be a challenge, especially if you are in a hurry. Perhaps a better strategy is to find the title loan companies you want to avoid; and find a few decent and reputable title loan companies as well.
Characteristics of a Decent Lender
A decent, honest, and reputable title loan company will have the following characteristics:
- Accurate and consistent information – Some of the least advisable lenders provide contradictory claims on their advertising materials and website. Take a look at the information they provide to their customers and make sure it is accurate and consistent.
- No, or low, minimum loan amount – Some of the least advisable lenders have high minimum loan amounts. You should never borrow more than you need with a title loan. Requiring you to borrow more than you need is something you will want to avoid.
- High minimum loan term – Similar to minimum loan amounts, title lenders should not require you to borrow money for a long minimum term. Title loans are short term solutions. Try to avoid lenders that lock customers into high interest loans for several years. See what happens when you extend a title loan for more than 12 months.
- Transparency – the best title loan companies are transparent about costs and fees. Title loans are expensive. Trying to hide this fact does not inspire trust.
- No prepayment penalties – A title loan with a prepayment penalty is not permitted in many states and is not advisable for any borrower. Paying off your loan as soon as possible, without penalty, should always be an option.
- Total Loan cost is reasonable – the least advisable title lenders have total loan costs that are not reasonable. In many cases, they can be more than the vehicle is worth. In some cases, they can be several times the original loan amount. It is not reasonable to repay $3000+ to borrow $1000.
Be Aware of Title Lender Tactics
One of the biggest advantages you can give yourself when looking for a title loan is understanding some of the tactics that title lenders use. Knowing these can help you avoid a making mistakes others have made and can help you weed out less reputable lenders. Some tactics include pressuring you to borrow the maximum amount you are qualified for, focusing on the monthly payment instead of total loan cost, not answering direct questions, and adding additional items to the loan.
Shopping for a car title loan can be difficult. Finding a decent title loan company can also be difficult. This is often complicated by the fact that there are a number of “online” title loan companies that are advertising title loans. Take some time, do some research, and trust your instinct. Title Loans have a negative stigma for a reason; because some title lenders have treated some borrowers very poorly. This does not mean all lenders follow the same practices, there are plenty of decent title loan companies. You just need to know what to look for.