Part of being financially savvy also means knowing that you may need to take out a loan at some point. Whether it’s buying a house or a car, there are just some things that you will be purchasing that require you to get financial assistance.
But not all loans are equal. Some of them may charge high interest rates while some might be good for short-term financing. With that being said, here are three kinds of loans that you need to know about:
Car Title Loan
A car title loan is a type of loan where you use the title of your car as a form of collateral against the debt you take on. This is especially useful for individuals who are not eligible to take out loans using other methods.
Contrary to what most people might think, your car will not be pawned while you borrow some money. You are still free to use your car, but it will be outfitted with a GPS tracker so the lending company has an added assurance on their end.
If you want to get a car title loan, some basic car title loan requirements that you might want to prepare are your vehicle title, any government-issued identification matching the name on the car title, your car’s registration papers, any proof that your vehicle is insured, and proof that you will be able to repay the loan.
Because the loan depends entirely on the resale value of the car, you don’t need to have a good credit standing in order to get a car title loan. While it is recommended that you be employed to get a car title loan, some lending companies do not require their borrowers to be employed in order to qualify for a car title loan.
While most people would not consider this a loan, a bank overdraft can actually be classified as a loan. This is because when you withdraw money from your account that is beyond your balance, you are essentially borrowing money from the bank.
If you wish to have the option to overdraw your bank account, you will have to get in touch with your bank to activate that option for you. This is because banks had to comply with new laws that mandate overdraft protection to be an opt-in service instead of a mandatory one.
People usually turn to overdrawing their bank accounts in order to make timely payments, which helps them keep their good financial standing with their utilities and other services requiring regular payments. Unfortunately, a lot of banks tend to charge fees every single time consumers overdraft their accounts, which can sometimes be higher than the amount that was overdrafted. If you feel that you may have unwittingly opted in to overdraft coverage, you can talk with a consumer protection lawyer to get some legal advice.
Dealer financing is a type of loan that retailers use in order to help their customers purchase their products on an installment basis. This allows consumers to purchase things they may want or need, like a new car or a boat, without having to worry about paying a lump sum amount for the product.
Dealer financing is especially helpful when you are buying items that are expensive. You will rarely be able to buy a brand new car and pay for it upfront. Through dealer financing, you can buy that car and use it immediately. All you need to do is procure the necessary requirements that the dealership will need you to present in order to qualify.