Utah is one of the states that consider title lending legal. Despite being notorious for high interest and short repayment periods, title loans in Salt Lake City, Taylorsville, Provo, and Sandy remain widely accepted.
If you have never taken out one of the alternative financial products before, you might think that they are just like the other secured loans you are familiar to. Such a notion could not be further from the truth.
In many ways, title lenders are different from traditional creditors. To understand what makes them tick, let us explore the things make them a unique breed.
They Are Not Pretentious
No honest title lender will try to convince you that what they offer is better than cash advances, personal loans, and other sources of instant cash. They are aware of the kinds of borrowers that gravitate towards them, and they trust their customers to understand the high risk attached to their products.
While title lending is a competitive business, the creditors in this sector are less likely to persuade fair- and good-credit borrowers to go with them. They embrace their unique role in the industry: to be the lenders of last resort.
Title lenders take pride in extending credit to the unbanked and the unscorable. They respect their responsibility to be forthcoming about their fees and the repayment process. This way, they can help their indebted and cash-strapped customers to build their credit.
They Do Not Run a Credit Check
Generally, a creditor will perform a hard inquiry in an attempt to scrutinize a customer’s credit reports before making a lending decision. Running a credit check for this purpose slightly lowers a person’s FICO scores, which will leave its trace on their credit reports for 24 months.
Title lenders perform credit checks but not for the same reason. They only view credit reports to confirm the identity of a customer and combat fraud. This means applying for a title loan should not add a hard inquiry in your file, and therefore, your FICO scores should remain the same.
They Value Customer Service
Unlike most creditors, title lenders do keep customers waiting for too long. They know their target market might need instant cash for emergency needs, so they strive to speed up the process from start to finish.
Title lenders require documentation, but they are uninterested in lots of papers. Your prospective lender wants to make sure there is any lien placed on the title, and your income is sufficient to make the payment on time and in full. As long as your auto loan is completely paid off, you should expect to receive the funds in minutes.
They Dislike Seizing the Collateral
Although they demand collateral, vehicle repossession does not motivate them. They would rather help a borrower repay the loan than seize and resell the car used as a security in case of default.
Title lenders know there is no guarantee that the proceeds from the sale of a depreciating asset can offset their financial losses. If you fall into arrears on your loan, expect your title lender to be kind enough to come up with a new repayment plan to help you zero out your bill.
It is wrong and unfair to mention title lenders and traditional creditors in the same breath. While some bad characters give them a bad name, the majority of title lenders are super reasonable and can even better in most areas than their peers from other corners of the financial services industry.