Important things can be overlooked when you’re busy trying to follow the big picture.
When determining whether or not a car title loan will work for your financial needs, there are only a few variables to take into account – the value of your car and your income (which determines the amount you can borrow), and the terms of the loan agreement (including the interest rate, term length, etc.).
These are relatively simple factors which make every title loan a bit different at first glance, but on deeper analysis, you’ll find that some title loans are significantly more affordable than others. This article teaches you how to figure out which loan works best for your financial needs.
First, you’ve got to understand that you do have options when looking to temporarily trade your pink slip for some cash. Some car title loan companies offer amortized loans, whereas others provide interest-only loans.
What’s the difference between these two types of loans?
Amortized Loans
An amortized loan means you will be given a set schedule of payments that have to be repaid at certain intervals in time (typically monthly).
Amortized loans have payments that include two different things:
- Principle – The amount of money that you originally borrowed
- Interest – The fee that you must pay for borrowing money (lenders issue loans because they are able to make money on the interest included in the loan)
When you issue a payment on an amortized loan, your payment thus includes some money for both the principle amount of money that you originally borrowed, as well as some money to cover the interest that has accumulated on your loan.
Amortized loans are perfect for those borrowers looking to take out a loan over an extended period of time (a year, 2 years, 3 years, etc.), because each payment made on the loan is for the same set amount, so you know what to expect each month as you work toward paying off the loan.
At Car Capital Financial, we issue amortized car title loans, ensuring that you have all of the information you need to determine whether or not the loan will work for you before signing any docs, and that you know exactly to expect you’ll need to pay each month.
Our customers have no surprises, because their payments don’t fluctuate, making it significantly easier for them to repay their loans, get their titles back and move on with their lives.
Getting a title loan from another company may not be so easy though…
Interest-Only Loans
When you receive an interest-only car title loan that means that your initial payments will only cover the amount of interest that’s accumulating on your loan.
At first glance, interest-only car title loans can look cheaper than amortized loans, because their initial payments may be lower, but in the long-run, the tables turn, and in a big way.
Borrowers with interest-only loans are often shocked when they’ve paid back all the interest on their loan (which certainly feels like an accomplishment), only to be confronted with what’s called a “balloon payment” – a much higher monthly payment that begins as soon they’re forced to start paying back the principal on their loan.
It seems like a good deal to everyone who thinks they’re going to start making lots more money in the near or distant future, but the reality of the situation is that many people don’t end up figuring out their finances, get used to the seductive low monthly payments from the interest-only portion of the loan, then find themselves in big trouble when the principal comes due.
For most borrowers, interest-only loans are a dead-end situation, and in some cases, they’re akin to financial suicide, because switching from low monthly payments to much higher monthly payments is a near-impossible task for people who are already having trouble meeting their financial responsibilities.
The only time it really makes sense to take out an interest-only loan is when you’re planning to borrow for a short period of time, like a few weeks to a couple months, and are sure that you’ll be coming into some serious cash between the time you borrow, and the time your “balloon payments” begin.
Which Loan Is Better?
There’s no “best” type of loan for everyone, because you will want to take out the type of loan that best fits your financial needs and unique financial situation.
However, with that said, most borrowers tend to have a better chance of repaying their loans and getting themselves out of debt when they rely on amortized loans, which is why we offer them here at Car Capital Financial.
Car Capital Financial
Unlike some of the other title loan companies, we don’t want you to get stuck in a never-ending cycle of debt, and we certainly don’t want you to default on your loan!
That’s why we provide amortized, secured personal loans, in the form of safe, reliable, yet affordable car and other vehicle title loans.
We’ve got over 17 years of experience in the industry and we’ve provided loans to thousands of Southern California residents just like you.
But best of all, our title loans don’t require you to leave your vehicle with us, or limit your use of the vehicle in any way!
We don’t need to run credit checks, so no matter what your financial history may be, it will not affect the affordability of your ability to qualify for a loan, your interest rates or your payment schedule. Title loans are issued based on the borrower’s ability to repay the loan.
To get your own safe, reliable and affordable car title loan, please call us right now.
We can get you the money you want in as little as 30 minutes!
Call now at 1-888-500-9887.