The common terms of a car title loan

If it’s your first time to get a car title loan, there are terms that might challenge you and sometimes they mean so much that they could affect you as you repay the loan. To help you had better understand the whole credit offer, we bring you some common terms.

Payment period

This is the period over which someone is allowed to pay back the loaned amount and the interest. Most of the Title Loans Kissimmee companies have a repayment period spanning from 3 months to thirty-six months. Some of the lenders will charge a penalty of a certain percentage in case you make late monthly payments. Therefore, when getting this loan, you must pay keen attention to the details of when you’re supposed to pay. In fact, you should demand a repayment schedule, which is a spread of the whole loan repayment.

Payment method

The lending company will always advise on the preferred method of repayment. It could be through checks, mobile phones, or online payment. Most of the companies have made it easy for the borrowers to repay their loans comfortably through the means locally available, at your convenience. Therefore, as you sign that application form, read to see what methods the lender prefers.

Interest charges

One of the ways through which financial institutions earn their income is through loans; they charge an interest, which is determined by the amount of money you’re borrowing and the repayment period. The higher the amount and the longer the period, the higher the interest. It’s actually a percentage of what you borrow. The lender amortizes the whole amount so that the principal, the interest and any other charges are included in the monthly repayments. Therefore, you will be paying equal installments on a monthly basis spread over the repayment period.

Use of funds

Some car title loan companies demand that the amount advanced be used for the purpose it was borrowed. This is important in ensuring that the loan proceeds serve the intended purpose. However, this may be stressful especially when you have a series of needs, some of which you may not want to reveal. Other lenders don’t care about how you’ll use the funds as long as you will pay promptly. Depending on what you want to do, choose a lender that is flexible, don’t tie yourself down to one thing, it might be stressful. 

Penalties

This is the amount that the lending company charges over delayed repayments. If there is, no money available to repay your loan on the stipulated date, then, your loan goes into arrears, this attracts extra fees and this is what is called a penalty. It is usually a certain percentage that the lender informs you before you take the money home. Thus, to avoid penalties, you must carefully read the terms, conditions, and get to know what attracts a penalty. This should be avoided as much as possible.

The list of the terms used by the car title loan lenders is long, but the above terms are common and key when interacting with a credit company. Read them carefully before you get the loan.