Pros and Cons of Title Loans in Texas

In tough economic times, vehicle title loans cover emergencies or unexpected bills. If your furnace dies or a pipe bursts, you need repairs made immediately. If you qualify for a personal loan with a bank, it can take weeks to get approved. Title loans are almost instant and you get cash in hand within a day typically. Despite the convenient nature, there are pros and cons of title loans in Texas that you must take into consideration.

Make Sure the Pros of a Title Loans

There are clear pros to a Texas title loan and speed tops the list. Bank loans take time. A bank loan should go through the application process, to underwriting, and then to approval and release of funds. Many banks use computerized underwriting to hasten the process, but any issues will require you to deal with a person. Office hours, time gathering additional paperwork, and then making an appointment to sign paperwork can take days or weeks. If you need cash now, the quick approval and cash release with a title loan are optimal.

With a title loan, you're borrowing against the equity in your vehicle. If you own a car worth $5,000 and have no outstanding loans and a clear title, you can borrow against that equity. You're simply saying that if you fail to repay, the lender can take and sell your car to get the loan amount back. You get to use your car while you pay off the loan, so nothing about your usual transportation needs is altered.

Credit checks are not performed on title loans. If you have poor credit, it doesn't matter. You'll still qualify for the loan as long as you have a clear title to your car, proof of income, and a government-issued photo ID.

Outweigh the Cons to a Title Loan in Texas

Interest rates on title loans are higher than a traditional bank loan. Per the Office of Consumer Credit, the average APR for a title loan in Texas was 574 percent in 2012. The thing to remember is that you will not have a title loan for a full year in most cases. Generally, you'll pay about $25 for every $100 you borrow when taking out a title loan. It's still a higher fee/interest rate than you'll pay with a traditional loan, so that's worth thinking about.

If you can't repay, you forfeit your vehicle. That's a risk anyone faces when taking out a title loan. You also could owe money still if the lender is unable to sell your car for the amount you owe. That's why many warn against taking out a title loan unless you've exhausted all other options.

Then Shop Around for the Best Title Loan Terms

Now that you are certain a Texas title loan is the best path, make a wise decision. Sites like Easy AZ Loans take your loan application and shop around for the best offers. As those offers come in, you go through them and decide which is the best match to your specific requirements. It's the best way to find a title loan in Texas with the lowest interest, best repayment terms, and highest consumer satisfaction rating.