One of the benefits of having your card paid off is that it becomes an asset you can leverage during the lean time. For instance, if your roof caved in during a storm, you can have it repaired the very next day. You only need to contact one lender of Salt Lake City title loans, and you’ll have the money to fix the house.
While such loans are convenient in helping you out of a tricky situation, they carry a premium interest rate. As such, you should make every effort to pay them as quickly as before.
Don’t let them carry over
Unlike conventional lenders, title loan lenders won’t dig into your financials and credit score before approving your loan. In most cases, they only need to ascertain the car’s ownership and value before issuing the loan. That explains the fast turnaround time with some as short as 12 hours.
However, this convenience comes at a price as these loans carry a higher interest rate. They also come with a short repayment period, often a month. Only five states allow such loans to carry installments. Failing to repay the principal and interest within the stipulated time causes the loan to roll over.
If that happens, you will now owe the loan plus interest at the prevailing interest rate. For instance, if you borrowed $1,000 at 25% interest, you will owe $1,250. If you don’t pay at the end of the month, you will now owe $1,250 at 25% interest.
Don’t take more than you need
Lenders are likely to advance you up to 50% the value of your vehicle. However, that doesn’t mean that you should take out the entire amount they are will to offer. Instead, you should only take as much money as you need to cater to your emergency.
Most importantly, you should take only the amount of money you can repay with the stipulated timelines. Most people run into problems because they fail to consider this when taking out a loan. Borrowing more money than you need increases the likelihood of defaulting on payment.
Despite the need to solve an emergency, take a moment and evaluate your ability to pay back the amount in full. That decreases the likelihood of defaulting and having it roll over. Taking out a loan that you can’t repay on time can ruin your finances for the foreseeable future.
Do come up with a repayment plan
About one in five borrowers have their cars seized by lenders after failing to repay their loans. Making a repayment plan can help you avoid such an outcome. Having your vehicle repossessed can drastically reduce your ability to eke out a living.
You need to make a repayment plan before or soon after you get it. You can pick an extra shift at work, look for a second job, or sign up for a part-time job during your free time. While that might seem like overkill, your finances will thank you for it.
Keeping up the efforts even after repaying the loan can help you avoid getting flat-footed by emergencies.