How Do Title Loans Work
Debt is becoming increasingly common among United States consumers. Statistics from 2018 indicate that the majority of adults in the United States are in debt. Broken down into baby boomers, generation Xers, and millennials, 80.9, 79.9, and 81.5 percent of the three cohorts have at least some dollar amount of debt on their credit reports.
As Americans, we often don’t realize how fortunate we are to live in the world’s largest economy. Finding employment is easy, supermarkets are packed to the figurative brim with virtually every type of good we could imagine, and consumers love to buy things from businesses. Getting a piece of the monetary pie isn’t too hard, though everyone is forced to trudge through stressful financial times at least once in their lives.
Seeking out short-term loans is an effective means of covering urgent expenses during bad financial times. One of the easiest types of short-term personal loans to attain is the title loan.
So, How Do Bay Area Title Loans Work?
First, we need to explain how loans work.
Bobby gets a loan from Tommy for $500. In a perfect world, Bobby would have plenty of money after lending Tommy the $500. Further, Bobby could be certain that Tommy would never fail to pay him back. However, we don’t live in a perfect world. As such, these two constraints are what encourage lenders to charge interest on the principal they loan out. Interest is paid as a means of compensating the lender and hedging against the ongoing risk of default.
What Is A Title Loan and How Is It Different From Other Loans?
In the United States – not to mention virtually everywhere around the world – owners of motor vehicles are required to register them within their states of residence. Owners should always keep this document, vehicular registration, along with the title, also known as the deed.
Registration prevents law enforcement officers from taking you to jail for not having a registered vehicle, not to mention potentially seizing it for good. The title proves that you’re the owner of the vehicle, indicates how many miles were on the vehicle at the time of purchase, displays the vehicle’s unique Vehicular Identification Number (VIN), along with other information.
What Is Collateral?
Most lenders require borrowers to place either a sizeable down payment to prove that they’re serious or sign over valuable assets to lenders that are kept by them in the event borrowers default on their loans.
Here’s the Answer You’ve Been Looking For
A title loan has the following characteristics:
- Borrowers must relinquish their vehicle’s title as collateral.
- Title loans are for relatively small amounts of money.
- The borrowing period typically doesn’t exceed one or two months.
Some of the most substantial benefits of Bay Area Title Loans are as follows:
- Borrowers can reliably secure cash with little notice.
- Title loans don’t involve credit report checks, offering all borrowers an equal playing ground.
- Unlike other types of collateral, you’ll be able to drive the vehicle you offered up as collateral throughout the loan’s life.