December 15, 2018
Loans are a big part of the United States economy, but for the average consumer, they can be confusing. Each year, over 1.7 million people in America take out title loans alone and even more take out traditional loans through a bank or other credit institution. Bank loans are far more popular for lending, which is probably why so many myths exist around the humble title loan. Myths have turned title loan lenders into bad guys — institutions who are set on making as much money as they can in the quickest time possible and having little to no regard for the person taking out the loan.
These myths can make the application process even more confusing than it already is. But Midwest Title Loan has been in the lending business for years and is committed to dispelling myths about title loans and making the process easier. We promise that if you’re in need of a loan and are considering borrowing through our institution, you’ll feel much more confident about deciding what type of loan you want after working with us.
What Are Title Loans and How Do They Differ From Traditional Loans?
Applying for a traditional loan or line of credit is so mainstream that almost everyone has some idea about how to do it. This lending process involves working with a banker to determine your creditworthiness and taking out a loan based on that creditworthiness. Because your credit history is determined not only by how often you miss payments, but also by the age of your credit history, what percentage of your credit card you’re using, and how many accounts you have open there are many ways to receive a poor or fair credit score. In fact, the majority of Americans are on the lower end of “good”, and even more have fair and bad scores, and this does not mean that all of them have consistently missed payments.
Having a credit score of lower than 670 can severely impact your ability to take out a bank loan — sometimes even preventing you from doing so. That leaves many Americans with limited options if they find themselves in financial hardships. Some opt to take out lines of credit, but these lines can come with hefty interest rates that cost them thousands of dollars over the life of the loan.
Instead of using your credit history, car title loans instead use physical collateral in the form of your car’s title. For traditional lenders, your credit indicates to them how much you can take out and how much you can pay back. Title loan lenders understand that credit scores often do not take into account situational factors. Title loan companies like Midwest Title Loan instead offer you the value of your car, and you make payments to regain access to your title. There is no credit score involved, and the application process allows most people to be approved for loans on their car’s worth.
What is the Application Process Like?
Those applying for a car title loan come into a title loan lender location and provide information about their car, including the owner of the car and the make, model, year, and condition of the car. Generally, as long as your name is on the title and you own the car outright, you are approved, and the lender goes over the amount they are willing to lend you against your car. If your name is on the title but has a lien on it, that means you are making payments toward ownership of the car, and legally it is not yet yours. Having a lien on your title does not necessarily mean you will get turned down for a loan. Instead, the title loan lender will set up a loan offer that pays off the remainder of what you owe to the original owner and gives you the rest.
In other words, if you come into a lender with a lien on your title, they will quote you the full retail value of your car. However, your remaining amount due will be subtracted from the full retail value, and your loan will be in the amount of what is left. However, if you intend to take out the loan for your title with a lien on it, you will be expected to repay the full worth of the car.
Once you accept the loan amount, the lender will go over payment terms with you, and you will be ready to receive the loan payment.
What Happens to My Car After I Take Out a Loan?
In legal terms, the title loan lender owns your car until you pay off the loan. However, most title loan companies will let you continue to use your car as a bank or a buy here pay here lot might let you do. Only if that you are unable to make payments consistently will your car be held by Midwest Title Loans.
Are They Really as Dangerous as Modern Myth Claims Them to Be?
A lot of falsities are spread about the dangers of taking out a title loan, but in truth, title loans are no more dangerous than credit cards or regular loans. If you have bad credit, no credit, or just need money quickly, a car title loan is often your best bet. And if you are clear with your provider and ask questions about your repayment terms and the terms of car ownership, you’ll understand the full parameters around borrowing from a title loan company.
Midwest Title Loan’s priority is to help our customers achieve their purchase goals with the help of our loan services. Whether your priority is to pay off your car’s amount owed more quickly or to take out a loan to pay for unexpected medical expenses, a title loan is often the best way to achieve these goals. For more information about what we do, or to clarify lingering questions about the title loan process, please stop by one of our stores. We have locations in Missouri, including Kansas City, Gladstone, and St. Joseph, and locations in Kansas including Kansas City and Overland Park. For more information on how to get to one of these locations, please visit our contact page.