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There are times when it seems that luck is not on your side. Just when you thought that balancing the household budget would go smoothly this month, some sort of financial emergency arises. The idea of borrowing money from a friend is less than desirable and with your current credit situation, the chances of obtaining a loan from a bank are somewhere between slim and none. This is where Tempe title loans can come in very handy. What is a Title Loan? Some times known as an auto title loan, title loans in Tempe are designed for people who need financial assistance as soon as possible. The criteria for receiving this type of loan is normally full ownership of a vehicle that is in reasonably good condition, a verifiable source of income, an active checking account, and proof of identification. Since the amount you can borrow is based on your income level and the estimated market value of your car or truck, the lender can process the loan in 24 hours or less. If you are seeking the loan in person and have all the required documentation, it is possible to have the money in hand in as little as a half hour. Do I Need Good Credit? With title loans in Tempe, borrowers are not required to have perfect credit. In lieu of running credit checks, the lender is basing the loan decision on the amount of income you generate each month and the fact that you have a clear title to your vehicle. For people who have been through a rough period financially and sustained some damage to their credit ratings, loans of this type can provide the resources they need to deal with sudden emergencies that are not part of the household budget. Why Do I Have to Surrender My Car Title? The title to your vehicle serves as the collateral or security for your loan. Businesses that provide title loans in Tempe specialize in what is known as secured loans. This means that the borrower pledges some sort of security that the lender can claim if the loan is not repaid according to terms. Since the lender is taking a chance that you could default on the loan, holding your car title helps to ensure that he or she will not lose on the loan arrangement. If for some reason you are not able to pay off the loan within the time frame allotted, the lender can lay claim to your vehicle by means of the title and then sell your car to cover the remaining balance on the loan plus the collection and other legal costs incurred along the way. Aren't Interest Rates on These Loans Quite High? It is certainly true that the annual rate of interest that applies to the typical title loan is more than the standard lending rate that applies to secured bank loans. Part of the reason for that higher rate goes back to the fact that the lender is choosing to grant the loan without requiring that the borrower meet many of the criteria that a bank or other type of traditional lender would require. That higher rate of interest helps to offset the risk that is associated with doing business with a client who might not be able to obtain a loan from any other type of lending entity. When you apply for the loan, you will have the chance to see exactly how much you must repay in order to settle the debt. You will also have be able to review the repayment schedule so there is no doubt that you can manage the payments responsibly. As long as you feel comfortable with the terms, accept the loan and use the proceeds to cover your emergency.
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