In this episode of
Money Creation Explained we are going to cover How Secure
Loans are Better than Car Title Loans.
A typical situation is that someone needs money now and
their next paycheck could be a week away or they have bills
that are due now or will be past due soon. They have some
equity built up in their car and figure that they will still
be able to use their car while making the repayments so they
look into getting a car title loan.
The appeal of the Car Title loan is that is a fast and easy
option to get money within 24 - 48 hours, with no credit
check and it does not matter if they have a low credit score
because the loan is based on the vehicle that they bring in.
Also there are no credit consequences if the loan is not
repaid and credit score will not suffer.
An example transaction is as follows: You bring the vehicle
to the Car Loan Lender and it is worth $4,000. The Car Loan
Lender offers you a loan of $1,000 (25% of its resale value)
with a financing fee of usually 25% (which translates to
around 300% APR) plus additional fees. The average car title
loan borrower pays about $1,200 in fees for the average
$1,000 loan. If you do not repay loan back on time and are
unable to extend the payment terms (which will cost you
additional fees) the Car Loan Lender can then reposes and
sell your vehicle, or sue you for the amount owned.
An alternative solution would be
Secure Loans which is a
service offered by IOU Notes. It allows users to leverage
their own funds to obtain small loans for personal and
business use as needed and never pay more than 5% interest
per year on those funds. Using our service, a user can have
a dependable emergency loan option, help build or rebuild
their credit, budget their money better, and stop paying
high interest fees from other loans. This service was
created because of the need for affordable small loans.
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