Texans enjoy some of the most flexible laws in America, particularly when it comes to title loans. I say flexible because title loans are banned in 25 states; that’s half the states. Furthermore, 1 in every 5 people who try out title loans ends up losing his or her vehicle. Now I have your attention, don’t I? I wanted to start on a high note so that from the start you know you are playing with fire. Title loans are not for everyone, but if you reside in Fort Worth, Texas, and feel you can handle them, here’s what you should know.
What is a Title Loan?
First things first, the key to understanding anything, is defining it; knowing what it is you are dealing with. So, what is a title loan? Well, it’s simply a loan that you acquire by offering your vehicle (usually your car, or motorcycle) as collateral. Normally, these loans are short-term and will carry higher interest rates compared to alternative methods of acquiring loans. The procedure is usually straightforward and takes from 15 to 30 minutes to finalize. The law in Texas demands that for a party to be eligible for such loans, he or she has to be 18years and above. Other requirements that may be necessary depending on the lender you are dealing with are: some kind of proof of existence like a government-issued ID or a driver’s license, physical mail to ascertain your residence, proof of income, a lien-free car title with your legal name, car insurance, and references.
Since 2012, according to the House Bill 2592, borrowers have more protection from the state due to the loopholes most title loan lenders used to take advantage of to make people’s lives miserable. Lenders are required to provide obvious disclosures regarding the interest rates and fees involved on a loan. Texas has restricted its interest rate limit to 10%. Be that as it may, most title loan lenders also provide credit access businesses (CAB) services; therefore, they are likely to be functioning as a bridge between the borrower and a third party. In such instances, they are eligible to charge additional fees. Most title loan contracts last for only 30 days, but Texans get more time to pay their debt since the law sets the limit to 180 days.
Tips and Things to Watch Out For
As you can see, a Fort Worth title loan isn’t so bad after all – until you fail to pay. Clearly, the law in Texas is one of the most favorable since it has prioritized the borrower’s interests. A title loan is meant to be used as a means to relieve you from some of the financial pressure you may be experiencing. But if you are not careful, it may instead add to the pressure and be the straw that broke the camel’s back. To stay safe and gain the most out of a title loan, pay attention to the points that follow.
1. When you intend to take a title loan, probably you’ll scan around to determine which companies offer the service within Fort Worth. Naturally, you’ll take the lazy man’s way and Google. It’s okay to Google since there are legit lenders who have established their presence online. However, beware of frauds, and lenders who are not obvious with their business. You want to ensure that whatever company you are dealing with is actually based in Fort Worth, Texas; hence, bound with the laws in Texas. If this is not true, when something goes wrong, the Texas’ laws will not be of any help in remedying the situation.
2. Besides ascertaining that the title loan lender is actually based in Fort Worth, Texas, make sure that the company is registered and regulated by the state’s laws.
3. If you feel you can handle a title loan, ensure you keep your end of the contract and pay up accordingly. With title loans, things often have a way of getting out of hand when borrowers miss their payments, and that is when people lose their vehicles.
4. The ideal title loans in Fort Worth, Texas are the 0% title loans. They have an APR (annual percentage rate) of – you guessed it – 0 percent for an introductory period. Moreover, if you manage to pay up the loan according to the contract, you’ll never pay any interest.
5. Don’t pay the title loan fees in advance. It doesn’t matter who they are, if they demand you pay the loan fees prior to giving you the loan, chances are that they are a scam.
6. There is a chance that you may not be able to keep your end of the contract and pay up the loan as agreed. That is the time you may be forced to default (according to the contract, when you don’t pay up within the agreed period, the collateral officially becomes the property of the lender and they’ll be eligible to take it from you as soon as within a week). Just in case you find yourself in this unfortunate situation, if you feel you still have a way of paying up, don’t default. Instead, talk to the lender and extend your title loan.
Nonetheless, even if your vehicle is repossessed by the lender, you can still catch up, provided you pay up whatever is due before the lender sells your vehicle. We both know that once it’s sold, you may as well forget about it.
Title loans are beneficial if you get a good deal, and manage to keep your end of the contract. The law in Texas favors both parties involved in the contract, especially the borrower. However, things can get ugly in the event the borrower does not keep his or her end of the contract.