The type of loan in which people used the title of their goods as collateral in borrowing loans is termed as title pawn. The concept rose in the 90s and the major purpose of the loan is to remove the poverty among the people of the country and the betterment f the economy at that time. These loans for the time being fulfill the needs of the people. These are short term loans with high interest rates and fluctuating due dates of repayment. Although these loans solved the current financial issues of the people but also provides a start of a new hidden financial difficulty.
Same day cash, urgent approval, all credit accepted, competitive rates are some of the benefits of title pawn. One has to go to the pawn shop and ask for loan over his vehicle or good’s title. The shop owner or lender usually make a short time appraisal of the vehicle or good and lend him money. There is no term requirement for lending money. The entire loan lending process completed the same day when the request for such loan is putted. Customer friendly environment is the sole part of the whole procedure. People can get loan in as short time period as of 30 minutes.
Title pawn providers have some requirements that must be fulfilled by the borrowers in order to get the loan. These conditions include certain form of government identifications and verification. The government identification includes government issued identification card, driver’s licenses, sources of income and their proof, residential proof, car registration and most important is liens free car title. The last requirement is the core condition of the loan. Lien free car title means that it is not in the defaulter’s list or having other loans over it. If such conditions are met then borrowing title pawn is not a problem for the customer.
The process of getting title pawn is fairly easy. Customer has to fill an online application form. Then he had to visit the pawn shops where he provide his government identifications and title hard copy to the lender. The shop owner makes an appraisal of the vehicle and tells the customer about the total cost of the vehicle. Additionally, he gives the information about the total amount which the customer can borrow over his property. The lender explains the customer methods of repayment that includes monthly installment and due dates regarding to the payment plan.
Title Pawn, if on one side provides benefits to the customer like short time approval, not much requirements, then on the other side it also creates problem for the borrowers. First of all, title pawn payments are not much high as it seems to be a trap for new customers. Secondly, title pawns have very high interest rates approximately 12.5 percent monthly that becomes 150 percent annually. With such high interest rates, the customer balance never goes down. Most of the payment he made to the lender covers only the interest over the actual amount. Another issue regarding such loans is continuous alteration of the schedule of repayment that teases the borrower on regular basis. The title pawn providers and borrowers do not report to the credit bureaus. If the customer does not make payment in time then he will be offer another loan to return the previous loan. After doing so, if customer still does not return the loan then the title of the vehicle or good is possessed by the lender in order to recover the amount.