In the Car Title Loan Debate, Need is Often Ignored
February 20, 2013
There are various media entities and consumer rights groups who question car title loans. However, they typically miss a key point – need.
Six percent of car title loan customers use their funds for shopping or entertainment. Nearly 87 percent of them report using such funds for unexpected expenses – meaning they have serious financial issues to deal with on a short term basis. Thus, most car title loan customers need to borrow money.
Traditional Lenders Don’t Meet All Needs
If would be great if everyone could get loans from traditional lenders, but that’s now how the lending world works.
Banks and other traditional lenders tend to work with mainstream customers. This means that they work with people who have regular jobs and good credit scores. Not everyone is in that situation, so there is an underserved market.
Those who do shift work often find car title lenders to be more convenient than traditional lenders, as they typically have longer hours and more comprehensive customer service. Those who have credit problems are usually shunned by traditional lenders, leading them to seek alternatives – including car title lenders. Others who don’t fall into the traditional lending scheme find a viable alternative with car title lenders, as well.
The Money Has to Come From Somewhere
For the mentioned reasons and more, car title loan customers often do not have access to traditional means of lending. However, this doesn’t change the fact that they still need to borrow money. That money has to come from somewhere, so it may as well be a legal source.
Alternatives to car title lending include pawn shop loans and payday loans. However, there are significant limitations to each. For example, pawn shops require the customer to surrender a possession – not just the title to it. Also, with pawn shops, loans are limited by the relatively small value of the surrendered item. Similarly, with payday loans, unemployed individuals are not qualified, leaving them without the option to borrow from such lenders at all.
It is important to re-emphasize the need for borrowing. As most car title loan customers are using such loans for legitimate needs, they must have that money. With this in mind, some people will turn to illegal sources of lending as a last resort, which is generally not good for the borrower or society as a whole. In fact, according to the Cato Institute, history has shown that loan sharks thrive in highly-regulated areas. For those who don’t know what a loan shark is, it is an illegal lender – often with ties to organized crime. Aside from the high rates that they charge, you could also end up in grave physical danger, with broken thumbs or worse. I’ll take a car title loan any day over that situation!
Do I Need a Car Title Loan?
Your financial situation will dictate whether or not you need a car title loan.
If you need a small loan, have little time to wait and/or don’t have access to a traditional loan, a car title loan may work for you. At Car Cash Loans, you can get a loan for as low as $500 in around an hour or less. Also, you won’t have to go through a credit check, so your credit history won’t be of any concern.
So, consider a car title loan if you need to borrow money. Just make sure that you make every effort to pay your loan back ahead of schedule and be sure that you can at least definitely pay it back on time, as doing so will minimize your interest payments.