Myth: Title Loan Customers Use Their Funds Irresponsibly
A common perception of title loan customers is that they are fools who can’t control their spending. Some believe that they’ll go out and buy unnecessary items like jewelry or spend it all on entertainment.
While the above is true in some cases, it represents a very small percentage of title loan customers. According to the Cato Institute, prominent Economist Jonathan Zinman found that payday loan consumers – who are the same consumers that would be interested in title loans – primarily use their funds for bills, groceries, debt service and emergencies. As payday loan customers and title loan customers go hand-in-hand, it is reasonable to assume that most title loan customers use their loans for legitimate reasons.
Other available information backs this up. According to the Cato Institute, here is some more information regarding payday loans (which, again, are similar to title loans):
70.8 percent of borrowers strongly agree that they use such loans to pay an unexpected expense
15.7 percent of borrowers somewhat agree that they use such loans to pay an unexpected expense
Over 80 percent reported that they lacked sufficient funds to deal with a particular expense at the time of their most recent loan
31 percent report using such loans for emergency expenses
Six percent report using such loans for shopping or entertainment
So, with the above information in mind, it is reasonable to assume that 6 percent of title loan borrowers don’t actually need the funds. The rest – 94 percent – do. Thus, we can assume that most people use title loans for legitimate reasons, not just to buy some jewelry or go to a concert.
Should I Consider Using a Title Loan to Pay for an Unnecessary Expense?
Well, 6 percent of people report doing this. However, I strongly recommend that you don’t join that group!
As with any other loan, you’ll have to pay interest and fees on a title loan. This compensates the lender for letting you borrow it’s money and for the risk that it is taking by lending to you.
With that being said, it’s best to avoid that situation and postpone an unnecessary expense until you have enough of your own income to pay for it. You may end up watching that playoff game on television or listening to your favorite artist on the radio instead of buying tickets, but you won’t have to deal with paying a loan back.
Should I Consider Using a Title Loan to Pay for a Necessary Expense?
A title loan is a viable option to pay for a necessary expense. It will probably cost more than a bank loan, but it offers a few advantages.
First, a title lender generally won’t run a credit check. This means that you can have bad credit and still get a loan.
Second, a title lender will often give you a loan on the same day that you apply for it. You could have the cash that you need in hours or even minutes in some cases. In fact, at Car Cash Loans, you’ll get your money in just 10 minutes in some cases and, in most cases, you’ll be out of there in less time than it takes to eat dinner at your favorite restaurant!
Things to Remember
Remember that people generally take out title loans and similar loans for legitimate reasons. While an unexpected expense may or may not be your fault, it happened and a title loan is a viable option to pay for it. Just be sure to take out a loan that you can afford and pay it off within the agreed timeframe.