Car title loans have recently become popular to people having financial woes may it be due to delayed paychecks, overdue bills or other emergency payments. This type of financial solution only came out in the early ‘90s. Before that, people used to secure loans through traditional funding institutions like the banks and credit unions. But because St. Thomas car title loans are much easier to secure and more convenient to borrowers, a lot of people prefer them over the traditional loans.
What Happened To Traditional Funding Agencies?
The common question everyone now has is where did the traditional funding agencies go? Traditional funding agencies are still here to stay. They now have lesser borrowers compared to that of St. Thomas auto title loan agencies, though. People place lesser trust on traditional loans because of the lengthy requirements or criteria for approval. For instance, most traditional funding institutions would require borrowers to have a good credit rating, a stable income and a favourable job history. This is because they base the borrower’s reliability on such factors.
Problem is there are so many people experiencing credit score fluctuations these days because of unfortunate circumstances which lead them to not having the chance to pay back their loans. Hence, they can no longer turn to these traditional loans for help owing to their poor credit ratings.
Where Do Bad Credit Person Turn For Help?
The stimulus for the birth of the St. Thomas car title loan business is the increasing pool of individuals having bad credit or little to no credit at all. These people also have emergency cash needs that they want to be solved. But since traditional funding institutions won’t allow them to borrow cash, they have nowhere to run to until car title loan agencies came along. Unlike traditional loan agencies, car title lenders offer loans to any person, regardless of credit rating. Apart from this, stable income and favorable job history are not requisites for approval to St. Thomas car title loans. As long as the borrower owns a “pink slip” or the title of a truck or a car, he or she can easily have a car title loan approved.
Traditional Loans vs. Car Title Loans: Drawbacks Compared
Both traditional loans and car title loans each have their own disadvantages. Car title loans, for instance, have the con of very high interest rates. The reason for this terrible interest rate is because lenders are dealing with unreliable consumers and thus they are putting their business on a very high risk of failing. However, if you choose the shortest term of St. Thomas car title loans, the interest rate would be bearable.
On the other hand, the main concern people have with traditional loans is that no one can ever secure it unless he or she has a good credit rating and a stable job. Furthermore, traditional loans take weeks to months to be approved. Hence, they are not convenient for emergency cash needs.