November 9 2014
Many people believe that title loans do not actually help people solve their credit woes but rather it just exploits borrowers with a promise to help solve temporary financial setbacks. Well, to some degree it is true but never is this issue and other related negative tirades about title loan a universal truth. In fact, it is also assumed that these issues were just formulated to discourage borrowers from depending on this kind of loan and go back to where they usually get credits; banks and other financial institutions. But don’t let the issues distract you from getting the best of the bargain when it comes to title loans.
Issue Number 1: It Causes People to Sink Deeper into Credit Pits
It cannot be denied that there are indeed borrowers who treat this kind of loan facility recklessly and do not care if they are already in the vicious cycle of applying a loan to pay another loan. This incident is not a representation of the whole. In fact, the percentage of borrowers doing this is so small that it does not warrant calling the whole thing off.
Issue Number 2: It Appeals to the Precarious Predicament of Borrowers
Admittedly, that is the reality. However, on the other side of the equation, many borrowers are put at a disadvantage when banks and other financial institutions do not lend money to them due poor credit score or are hesitant to approve the loan as the amount do not meet their usual requirement or the reasons are unacceptable for them. Title loan companies should be lauded for their courage in risking their investments with borrowers who have bad credit rating and approving loans with less rigid background check. Undeniably, the government is sometimes helpless when it comes to extending financial help to borrowers in order to remove their financial worries; it has other priorities too.
Issue Number 3: The interest rates can be considered as usurious
The truth is that the government do not see it this way. Only people with an axe to grind perceive the interest rates as really high and unreasonable. There are some things that you have to consider why this is so. First, the risk involved as discussed in the preceding paragraph is the reason why interest rates are higher. Banks also do this if they extend loans to any of their esteemed clients asking for money to fund risky projects.
Issue Number 4: Title loans companies will get your car and you end up with nothing
This allegation is tantamount to screaming “Wolf! Wolf! Wolf!” It is a reality that does not usually happen. Title loans companies will only resort to this initiative if the borrower cannot repay the loan despite renegotiation and payment rescheduling. Remember that borrowers can only roll or renew the loan up to 7 times in some states and after that loan companies can consider the borrower as in default.
It is safe to assume that borrowers seeking a title loan are not playing blind eye to the allegations and what is the real thing. One needs to understand that acquiring a loan is a personal decision and loan companies should not take the blame one hundred percent.
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