Banks are undoubtedly the oldest and the most traditional mode of loans that are in operation since many centuries. But this doesn’t mean that they are the only reputed and trusted medium available to meet the loan requirement of people around the world. The society has changed because so many economic reforms has occurred in the past and today there are cluster of financial institutions present that are helping people get quick small loans to meet their end needs. An individual don’t often like to go to a bank and apply for a loan if he only requires a small amount of money. So what he does is that he heads-off to micro finance institutions like payday loans, private money lending firms, car title loans providers and many others to mention here.
The reason why people prefer to opt for these unconventional mode of loans is that they doesn’t consume as much time as a bank loan process consumes. Beside this people don’t want to waste so much of their time to get a small loan and wait for so long for the loan to get approved. All these factors have contributed to the growth of these micro finance institutions that are now flourishing and have snatched a big part of the share of banks and big private lenders in terms of revenue generated through loan interest. In all of the micro finance institutions the one type which has witnessed a significant growth is car title loan. This might not appeal to people much but in reality car title loan not only covers personal vehicle title loans but also covers commercial vehicle title loans Los Angeles. And in all terms give banks a run for its money in small loan category.
Let’s have a look at all the factors that make car title loans a better choice than banks in small loan category:
Less paperwork: Banks have a lengthy loan approval process whether the loan amount is small or big. The loan approval generally takes a month or two even if the loan applicant meets all the terms and conditions for the loan. But this is not the case with car title loans as the paperwork is kept minimal. All that a loan applicant has to present is the title of the car, insurance details, no lien holder, address proof, government issued identity and some other minor details and that is it. The process generally takes a day or if the borrower insist the loan is sanctioned within few hours.
No credit history required: Banks don’t entertain people for a loan who have bad credit history or is a defaulter in the past. But credit history of an individual doesn’t have much importance in car title loans as the loan is sanctioned on the value of the car. If the borrower fails to repay the loan amount the lender has the authority to put the vehicle on sale and recover his loan amount. So the credit history is not important as the title of the car is kept as collateral.
No pre-payment penalty: Banks charges a fix percentage of the loan amount when a borrower makes pre-payment of the loan amount. But in car title loans there is no such thing exist. The borrower is free to make pre-payment of loan at any given time and no penalty or percentage of the loan amount is imposed on the borrower.