Evidently, when you have the chance to get a loan based on your good credit rating, then by all means, take advantage of that opportunity. You'll most likely have financing companies competing for your business and can negotiate lower prices because your credit history gives you bargaining power. These title loans in AZ are simple to get if you have a steady income.
However, for those of us with bad credit histories and no bargaining power, it is important to be aware of all of the credit options available to us. Most, lenders will require collateral. This means they'll ask us to put up something of value - which we own - as collateral for your loan. It's a measure they take to ensure they'll get their money back 1 way or another. They get full payment for the loan, or they take our collateral.
So let's say you have something of value which "something" is a vehicle. You have the title for that vehicle and so as to get some quick cash, you approach a title loan lender to get financing, together with your name as collateral. Here's what you want to Be Certain you find out beforehand:
Term of the Loan - The bottom line is, just how long do you have to pay this loan off? One sort of title loan to be averted is the Title Pawn loan. A Title Pawn is generally a 30 day loan with a balloon payment at the end. Meaning you have 30 days until the full amount of the loan, including interest, is expected. This is almost impossible to repay and can lead to greater debt. So stay away from this kind of title loan!
Prepayment Penalty - Let's face it, loan companies need your interest payments. That is how they earn money. To ensure they make a profit from your loan, they dissuade premature repayment by charging you a penalty for paying off your loan early. So before you sign the loan, be sure to ask your loan officer if there is a prepayment penalty.
How Interest is Accrued - Most loan businesses calculate loans so that the initial payments are applied primarily to interest, with a rather small portion of those payments going toward principal. The nearer a borrower gets into the end of the period of the loan, the more their payment is applied to main rather than interest. This is a common practice among moneylenders, and not at all exclusive to name lenders. But, there are varying ways of determining interest. For example, is your interest amount dependent on the rest of the balance of the loan, or can it be determined by the full amount of the loan and then divided up into the monthly payment? A loan that only charges interest on the remaining balance of the loan will save you money in the long run. Since each time you create a payment toward principal, the remainder of your loan reduces, therefore lowering the amount of interest due on this loan.
Unfortunately, most people with terrible credit end up paying more for their loans than people with good credit. But utilizing these ideas are able to keep borrowers from paying more than necessary.