There are plenty of online articles and blog posts about title loans being “bad”. It is important to note that many (not all) of these articles are published by title loan competitors or publishers compensated by title loan competitors.

Obviously it is in their best interest to provide “alternatives” that benefit them or the companies compensating them.

That would be fine if they actually provided some real, useful information for title loan customers. The problem, for most title loan customers, is that title loans serve as a necessary source of funds when no other sources exist.

Most articles about “alternatives to title loans” do not include options that the typical title loan customer can capitalize on.

Two Problems with most “Title Loan Alternatives” posts

There are two problems with most of the posts about title loan alternatives. We mentioned the first, which is they are a way of advertising for title loan competitors.

The most common alternatives mentioned:

1. Credit Card Cash Advance
2. Payday Alternative Loan (PAL)
3. Personal Loan

All three of these alternatives to a title loan benefit competitors to title lenders (banks and credit card companies).

However, since the interest rate is usually lower for all three of these you should definitely consider them before getting a title loan.

This brings us to the second problem: most of the alternatives provided are not viable for most title loan customers.

Why these Alternatives are not viable:

What the writers of these articles don’t understand is that not everyone has a large savings account, 401k, or credit cards with high limits.

Many title loan customers are also already working multiple jobs and do not have other collateral like a home.

This makes getting a personal loan from the bank impossible. To get a cash advance on a credit card you need available credit and a card that allows a cash advance.

We imagine most readers are disappointed with these alternatives, so we’ll provide some useful alternatives in this post.

First, we’ll point out why the title loan alternatives provided by most authors are not useful for most title loan customers.

Get a personal loan from a bank

This title loan alternative is usually listed as the number one or two option in most lists of alternatives. The problem is it is very difficult to get a personal loan from a bank without home equity.

A personal loan from a bank is very difficult, if not impossible, to obtain without perfect credit and home equity.

If you happen to have this option available, by all means take it instead of a title loan.

Payday Alternative Loan

Payday Alternative Loans are great alternatives for Payday Loans, hence the name. Payday loans and Title Loans are very different. There is a reason they’re not called “Title Loan Alternative Loans”.

Most title loan customers either need to borrow more than a Payday Loan will allow or need more time than a Payday loan will provide.

If you only need a few hundred dollars for a few weeks then this may work for you. You can use the Payday Loan Calculator to help find a reasonable Payday loan and compare costs.

Get a part time job

Again, this is usually listed as an alternative to a title loan. While it is easy for someone else to tell you to get a part time job if you need money, the fact is in reality many title loan customers are already working multiple jobs.

For customers working full time or more already, this alternative is not an option.

Often the funds are needed to cover an emergency expense. Finding an additional part time job will not provide the funds quickly enough.

Credit Card Cash Advance

Similar to the personal loan, this is only a viable alternative for those with available credit and a high limit credit card that allows cash advances.

If you have one, then definitely take it as the interest rate will be lower than a title loan. Even a title loan from the best title loan company will be more expensive than a credit card cash advance.

The problem is most people seeking title loans are doing so because they do not have enough available credit to cover their emergency expense.

Real Title Loan Alternatives

Given the lack of real alternatives that title loan customers can act on we will provide three that can be helpful that do not require a bank loan or credit card.

Find a Lower Rate Title Lender

Not all title lenders charge triple digit rates or the 300% APR that most articles note. With the increase in online title loans there are more options for getting a title loan today.

This includes lenders that offer discount title loans that are much cheaper than the maximum rate. For example, a $1,000 loan at 8% per month costs roughly $80 in interest to repay in 30 days.

They are an alternative to the typical title lenders that charge very high rates. If you do decide to get a title loan, make sure to do a cost benefit analysis.

Get A Secured Consumer Loan

Another alternative to a title loan, that you can get quickly, is a consumer loan secured by your vehicle. Companies like OneMain and Lendmark (and others) offer loans secured by your vehicle with interest rates that are less than those of title lenders.

These companies do require OK credit, but may also be able to consolidate other debts. It is worth contacting them to find out if they are a real option for your situation.

Use your Vehicle to Generate Funds

There are several ways you can use your vehicle to generate funds instead of getting a title loan. Whether or not this is a viable option depends on the size of the loan you are looking for and the length of time you have.

The three ways you can use your vehicle to generate cash include:

1. Rent – there are services now that allow you to rent your car when you are not using it. They are not available in all areas, but may be worth looking into.
2. Delivery – there are a number of companies paying for delivery services, form food and goods to documents. Check demand in your area if you have the time.
3. Selling the vehicle – You can also sell your vehicle instead of a title loan. If your vehicle has a significant amount of equity, you can sell your vehicle and purchase a less expensive one.

If you need funds immediately, but want to get more for your vehicle by selling it to a private party, you can get a title loan and place an ad for the vehicle.

Check the difference between trade-in and private party value on kbb.com to determine if it is worth it.

Conclusion

Most people do not plan on getting a car title loan and only do so when absolutely necessary. Prior to getting a title loan it is a good idea to explore all alternatives.

To compare other alternatives with a title loan use our title loan calculator. If you can find a less expensive alternative to a title loan then take it.

The post Car Title Loan Alternatives appeared first on FTL Title Loans.

Online car title loans can be a fast source of funding when no other sources exist. This can be very helpful for those without extensive credit options.

The question “are title loans worth it” has to be evaluated based on each person’s specific situation. Finding the truth about how title loans work is not as simple as performing a web search; for two reasons.

Lender bias and competitor bias. First, we’ll explain both. Followed by how to perform an objective analysis to determine if a car title loan is worth it based on your situation.

Lender Bias

The first item that adds confusion to figuring out if a car title loan is really worth it is lender bias. If you read anything written or published by a lender, the likelihood is that car title loans are definitely worth it and you will probably be encouraged to borrow the maximum you qualify for.

The reasoning is simple, lenders make money on the amount of outstanding loans so it is in their best interest to maximize that number.

You may be asking why we, FTL Title Loans, are saying this since we are a title loan company. We have a different philosophy from most other title loan companies and operate with the principles of honesty, transparency, and advising our customers to make the best decision.

In many cases this decision is not a title loan. We are ok with that. We are not ok with misleading customers into a loan they cannot repay. So, with that said, take this into consideration when reading anything published by a lender.

Lender Competition Bias

The second item that complicates answering the question “are title loans worth it” is bias from title lender competitors. By lender competitors we mean other financial institutions and products like credit cards and personal loans.

There is no shortage of articles, many published by credit card affiliated companies and financial companies, stating how Title Loans are bad and should be avoided at all costs. Unfortunately for the reader, most of the stated “facts” in these articles are simply not true today.

The Facts about Title Loans

Like many other topics, the truth is somewhere in the middle. Title Loan Companies say title loans are the answer to your problems. Their competitors say avoid them at all costs.

The truth is, title loans can be a solution to your short term financial problems if one makes sense for your specific situation. Title Loans are not long term solutions to any financial problem and are not meant to be.

Cost Benefit Analysis

The only way to objectively determine if a title loan is worth it is to perform a simple cost benefit analysis. First, we need to determine the cost of the title loan.

Then, we need to quantify the benefit received from the title loan. Finally, we can compare the two and we get our answer.

Determine the Title Loan Cost

Determining the Title Loan cost is easier said than done. Most lenders do not publish their costs because they are so high. The good news is there are a few lenders that actually charge reasonable rates and provide their costs.

FTL Title Loans provides a car title loan calculator that gives you the total cost of a title loan. One of the benefits if this calculator is that you can use it to estimate the cost of a loan of any amount and length.

Go to the title loan calculator, enter the amount you want to borrow, the loan term, and lien fee. This is the cost portion of the cost benefit analysis.

Determine the Benefit of the Title Loan

The next step is quantify the benefit you will receive if you do get the title loan. This will be directly related to the reason for the loan and will differ for every person. To help you quantify the benefit, we’ll take a look at three real world examples.

Title Loan Benefit Example 1

Example 1 is getting a title loan to cover an unexpected car repair. Car repairs seem to happen at the worst times and can be very expensive.

Additionally, if you use your car to commute to work it is needed to keep your income steady. To determine the benefit, take postponing the repair until you can save enough to pay for it and assign it a value.

Will you need to take public transportation to work? An Uber or cab? Or will you need to rent a car? If this is the case, determine the costs associated with the most likely.

Title Loan Benefit Example 2

Example 2 is paying for an emergency medical expense for a family member. Health care costs have dramatically increased and even a very brief visit to the emergency room or hospital can cost a significant amount of money even with insurance.

Not paying the bill can lead to stress and eventually collections which will harm your credit in the short and long term. Try to quantify the benefit of taking care of the expense.

Title Loan Example Benefit 3

Example 3 is getting a title loan to pay off credit card debt prior to making a large purchase. Some customers get a title loan prior to purchasing a home or other property to lower their outstanding balances.

This increases their credit score which allows them to get a lower interest rate on the large purchase. Even a slightly lower interest rate on a large, 30 year loan can be significant. Determine how much you could save by improving your credit.

Analyzing Title Loan Cost versus Benefit

Now that you have the cost of the Title Loan, and the benefit, you can do a simple cost benefit analyses. For example 1, if the title loan will cost $600 in interest over a year, and a rental car will cost $400 during the time it would take to save for the repair, then a title loan is not worth it (and vice versa).

For example 3, if improving your credit score will save you $3,000 over the life of the large loan, and the Title Loan costs $1,000, then the title loan is worth it.

Example 2 is a bit more subjective. You have to decide what the stress of having an unpaid bill, combined with possible collections is worth.

Conclusion

Title loans are sometimes worth it and sometimes not. It is important to analyze your situation to determine whether or not a title loan is worth it for you. If it is, find the best deal with a reputable online title loan company.

The post Title Loans – Are they worth it? appeared first on FTL Title Loans.