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How to get out of title loan ?

If you’ve felt like your loan is slipping and you need a little extra cash on hand, car title loan might seem like the perfect solution. However, these loans can come with some serious consequences if you don’t take the time to carefully weigh your options before signing anything. This post will give you all the information you need to make an informed decision about whether or not this is a wise move for your financial situation.

Payday Loan vs Title Loan

You can think of title loans as a more extreme version of payday loans. Just like a payday loan, you need to have a regular source of income to qualify for one. Title loans are limited to the value of your car and the interest rate can be very high, although in many states, there are limits on how much these rates can increase each month.

There are numerous stories of individuals who were living paycheck to paycheck until they took out a  loan. Instead of being able to pay off the loan, their lives became even more stressful because they could not make their monthly car payments. This often leads to them losing their cars and taking on even more debt.

Therefore, you need to consider if this is really the best option for your financial situation. Here are some other things that you need to consider before getting a Car title loan:

  • You cannot pay off a loan early
  • A lot of people know that when taking out any type of payday loan, there is no way on earth that you will ever be able to afford paying it off early.

What are Title Loans?

Title loans work in almost exactly the same way as payday loans. The biggest difference is that with a payday loan, you might use your paycheck directly as collateral for the loan, your car title is used as collateral instead.

Paying Early 

Unfortunately, there is no way to pay off a vehicle title loan early. This loans are designed so you can’t pay them off until your next car payment is due.

However, while this might seem like a major downside of Car title loans, keep in mind that one of the biggest drawbacks of payday loans is that you cannot pay them off early either.

Interest Rates 

Loan lenders usually charge rates of around 17% interest per month which is about the same as for payday loans.

One Payment 

One of the big advantages of title loans is that you can make one payment every month to get out from under the debt. This is a very attractive feature for anyone who has been stuck in a cycle of borrowing and paying off these loans.

Staying on top of your payments

It is not uncommon for title lenders to lock your car up if you are late on your payments. They might also charge you with additional fees if they feel that you might be trying to game the system by paying more than one payment each month.

Steps to Getting Out of it

  • As with payday loan, you want to do everything you can to avoid getting into the situation where you need a loan. Unfortunately, sometimes it seems like there are no other options and you wind up having to deal with these situations.
  • What you need to do in order to get out of a loan is just like what you would do with any other type of debt. You need to get on a budget and start living within your means.
  • While this can be a real challenge, you need to practice the same discipline with title loan as you do with any other type of debt. Here are some tips that can help you stay on track:
  • Pay more than the minimum payment every month for all your credit cards and loans
  • You might be tempted to think that if you pay the minimum amount due each month, it will take forever to get out from under this debt. However, this will not happen and it is a huge mistake.
  • By paying more than the minimum amount due each month, you will make sure that you are able to pay down the vehicle title loan as quickly as possible.
  • If you are tempted to use credit cards or other forms of debt consolidation in order to get out of loans, it is a bad idea.
  • Making a single payment for a large amount can seem like a good option on the surface, but it leads you right back into the same situation as before.
  • Understand the penalties for late or missed payments
  • You need to make sure that you understand all of the fees involved with title loans. The worst part is that these fees can quickly add up to more money than your initial loan.

Pay in Small amounts every month

As with any debt consolidation loan, the best thing to do is to consolidate all your debt into one large loan. This means that you only need to make one payment each month and hopefully, you will be able to get out from under the loan quickly.

However, if you want a simple way to get out of car title loan here are some common tips:

Make sure that you know the limitations to the amount of money that can be borrowed with these loans.

Lower Your Emi
  1. If you can reduce your EMI, you can reduce the number of months that it will take for you to pay off the loan.
  2. You can do this by getting a lower interest rate or by paying off the loan early.
  3. Lower your monthly car payment
  4. You might be able to get out from under the debt much more quickly if you simply make a single lump sum payment on your car every month.
Increase the Loan Term

If you have been stuck with a loan for a while, you might be able to increase the amount of time that you owe on the loan. This way, the amount that you owe will be reduced over time and it will take less time for you to get out from this debt.

However, keep in mind that if you do this, then the interest rate on this loan will go up. It is possible to increase your title loan term by as little as 30 days by raising your monthly payment.

Make Quick Big Payments

To get out of a loan, it is a good idea to make big payments. This can help you to get the money that you need without making additional payments.

However, keep in mind that this could lead to more debt as well. You may end up paying off the loan quicker than you anticipated and leave yourself with even more debt.

In order for this approach to work, it is important for you to have plenty of money set aside and enough time in your budget for large payments.

Another Loan is never a solution !

Further, if you are faced with high interest rates on your car title loans, it is a good idea to look into refinancing them. You can often refinance your loan and get a new loan at lower interest rates. This will save you money in the long run and it can help you to get out from under this debt much more quickly.

The fees involved for refinancing vary by lender, but they should be no higher than the fees for getting a new loan.

Paying title loan via credit card

If you find yourself with a loan that is very difficult to deal with because of the high interest, you might want to consider making your payment through a credit card.

If you have to pay off this debt over several months, it can add up to quite a bit of money.

However, by using this method you will end up paying for your car loan in small increments throughout the month and you will be able to use a credit card instead of a car title loans.

Debt consolidation Loan

Finally, before you start your research on how to get rid of an old title loan, make sure that you check out all of your options. One option is to consolidate some of the debt that you have on your credit union first. This will usually allow for you to pay off a portion or even all of your debt at one time.

Most people who are taking out a title loan do not end up needing it as much as they had anticipated, but this does not mean that they should not seek out a consolidation loan.
For more informative articles keep visiting Emu Article.

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