Tag Archives: car title loan

A Car Title Loan is Not All About Losing Your Car

Issues and concerns about car title loan focus on the repossession aspect of the loan.  Borrowers and other people are aware that in case they cannot pay the loan on time and they have already exhausted their roll over privileges, the lending company will repossess the car as payment for the loan.  However, there are other interesting ideas about this kind of loan which other people are not aware of and might be a consideration when formulating state policies to govern car title loan and other similar forms of credits.

Poor Borrowers Are Good Payer

It has already been established in many academic studies that poor and regular borrowers tend to resolve their obligations as opposed to rich people.  This can be attributed to the fact that small borrowers have something bigger to lose when they cannot fulfil their loan obligations; they will find that no creditors will lend them money at the end of the day.  Rich people have assets to leverage and in fact some of their loans are pure accommodations by bank in order to show their CEOs that the bank is performing and loaded with rich clients.

Poor Borrowers Are Very Optimistic

The reason why millions of borrowers are not afraid of short term periods and high interest rates is because they are positive that they can repay any kind of loan that they will avail.  Thus, they are also not afraid to take out several loans from different loan companies.  In some studies, only a small percentage of borrowers were not able to repay the loan and almost 80 percent of instant loan borrowers fulfil their obligations.

Instant Loan Companies Are Not Particular with the Way Loans Are Allocated

Car title loan companies accept almost all kinds of reason when they decide to approve for a loan.  In addition, these companies do not monitor if borrowers really spend the loan proceeds on the reason stated.  Thus, the loan is prone to abuse and misuse and as a result, borrowers end up accumulating loans and credits and find themselves having difficulties meeting the obligations.  With this, it is important that car title loans companies will revise their policies on reasons for accommodating the loan in order to help borrowers avoid getting into debt traps.

Only a Small Percentage of Cars Were Repossessed

This could be due to the fact that poor and middle class borrowers have more to lose than rich people; hence, they are really moving heaven and earth to pay the loan.  Thus, it is not right to accuse car or auto title loans companies that they are exploitative.  Policy makers should look into this aspect if they want to help millions of borrowers get a better bargain when it comes to this kind of loan.

Based on the above ideas, you can conclude that a car title loan is not really that bad.  Some people just focus on one aspect of the loan and ignore other positive aspects like borrowers meeting their loan obligations and only a small percentage of cars were actually repossessed.

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Top 4 Complaints about Car Title Loans

Many things have been written about the features, advantages, benefits, and disadvantages of a car title loan.  But not too many people know about the top complaints with regards to it.  There is no such thing as complaint free company that even big companies who frequently land in the Fortune 500 list also receives complaints.  Based on various reviews found over the Internet, here are the most common complaints of borrowers with regard to car title loans companies:

  1. The interest is so high. Even though borrowers were informed prior to their loan application about this matter, still, they got the shock of their life when per their own computation; they realized that they paid thrice the amount of the original loan. The funny thing here is their complaint did not factor the reason that they were not able to pay on time and loan companies automatically rollover their loan; thus, earning more interests and other surcharges.
  2. Payment term is so short at 30 days only. Maybe some were just too lazy to search for other types of loans which they can avail longer payment terms for. In fact, they can even secure a loan from a family or friend that’s interest free at that and using the car as collateral.  However, there is a tendency that people close to them will demand temporary possession of the car itself while borrowers cannot pay the loan which car title loans companies do not require.
  3. They realize that loan processing and approval takes longer than as advertised. There are many possibilities why this thing can happen:
    1. It took quite a time for loan companies to approve the loan. As per background check, the car title presented showed some encumbrances and they have to double check it first.
    2. Due to the increasing popularity of this kind of loan, many people have applied; thus, traffic for loan processing increased and loan companies were saving money that they do not want to hire additional manpower to facilitate things. The solution therefore is for borrowers to find the least popular one (check online visit stats to know this) if you have problems regarding speed of loan processing and approvals.
  4. Low appraisal. Loan companies have to earn and secure their operations too as they have employees to pay and families to support. Millions of borrowers whose personal lives will also be affected if loan companies will go down under just because they were too liberal in providing credits to customers. Thus, they have to be careful when appraising the car since the amount of loan to be approved is based on the appraised value.

As you can see, the above complaints were unfounded and just part and parcel of the whole car title loan industry.  It is just some people who were quite disappointed with the amount received.  Others were frustrated because of too little time granted for them to repay the loan and gives them additional stress and pressure.

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