Title Loans today are different than they were even just a few years ago. Compare them to 9-10 years ago, and there are significant differences. This is to be expected as many loans and credit instruments have changed and evolved over the years. Considering the technology improvements over the past decade, title loans have been fairly slow to adopt features like mobile applications and mobile payments. However, Title loans today are still one of the fastest and easiest ways to borrow money.
Title Loan Information Today:
Unfortunately, many of the articles published online today, including by large well know publishers like Credit Karma, are based on research and studies published years ago using data from 2011 or even earlier. This can make it very difficult for the average consumer to figure out how title loans work today. One the one hand we have title lenders sites providing information; which is not accurate due to the lack of transparency in the industry. On the other hand, seemingly trustworthy sources are publishing articles based on outdated information that is simply not relevant anymore.
Information Provided by Title Lenders today:
As we mentioned, it can be difficult to find accurate information about title loans today from trustworthy sources. It is understandable that information directly from title lenders may come with some bias, but we would hope the information is at least factual or useful in some way.
Title Loan Structural Changes
Looking back ten years ago many Title Loans were structured as 30 day loans where the full amount, plus fees and/or interest, was due in 30 days (or less in some cases). For title loans today that has changed. Today, many title loans have longer terms giving the borrower more flexibility with the repayment period.
Repayment Terms for Title Loans Today
For title loans today, 30 day loans are not the dominant loan term. These types of title loans do still exist in many states, however there has been, and continues to be, a shift towards monthly term loans with a repayment term of approximately 12 months. Some lenders, especially online lenders, are offering even longer repayment terms of 2-3 years.
Is a Longer Term Better?
There needs to be a balance between a reasonable repayment time period and a term that is too long. The reason; cost. A Title Loan amortized for 2 years costs significantly more in interest than a 12 month loan. Similarly, a 3 year loan costs significantly more than a 2 year loan. This becomes even more expensive as the interest rate rises. On the other hand, a very short term loan can be difficult to repay in full on time. Considering repossession is a possibility for a default, finding the right balance between loan length and total interest charged is essential.
Using the Title Loan Calculator to find the Optimal Term
As mentioned, the loan term can make a big difference is both the affordability of the title loan and the feasibility of repaying the loan. We developed a Title Loan Calculator that allows you to enter any loan amount with different loan terms (in Months) and it calculates the total interest as well as amortizes the loan over the repayment period. The results show the total cost of the loan over term including interest for each payment. This allows you to find the optimal balance between affordability and feasibility. Meaning, a term long enough to result in an affordable payment but short enough to provide a total interest cost that is reasonable for the loan amount.
Online Title Loans are an Option Today:
Today getting a title loan provides the option of an online title loan. Additionally, even for a direct lender with a brick and mortar location, the title loan process can be started online with an application. Most title lenders, including those that offer online and regular title loans, offer a completely online title loan application.
One thin to keep in mind if you do choose an online title loan is the process is a bit more involved than visiting a lender. You will need to take pictures of your vehicle and provide more information related to you and your vehicle to facilitate the underwriting of the loan. This does mean it is possible to get a title loan today without the car.
Some online lenders also require a credit check. While Fast Title Lenders does not check credit for any of our car title loans, a few lenders do. If this is important to you, make sure to confirm with the lender prior to applying. These means that some title loans will have an affect on your credit.
Payment Methods for Loans Today:
In the past, most title loans required in person payment by cash or through Western Union. There are still some lenders with this requirement, but many have made it easier to pay online and/or over the phone. With a monthly term loan, visiting the lender every month to make a payment can be an inconvenience.
Conclusion:
The title loan industry is evolving and starting to offer more convenience with both receiving the loan and making the monthly payments. This does not apply across all lenders. Make sure to check with you lender and familiarize yourself with their policies.