If you live in California, what would make you want to take a title loans in San Jose as opposed to say a personal bank loan from the local bank? Do you even have a choice apart from getting a car title loan?
Below you will get to see what makes car title loans so important and accessible as opposed to bank loans.
- Credit History, a catch 22
Let us face it, the biggest catch 22 about bank loans is that you first need to have a credit history in order to get a loan. The question is, what if you are 18 years old and you don’t have a credit history yet? What if you are a new immigrant to the country? What do good honest people who are not in the credit system do? They too have financial needs just like everyone else.
Car title loans come to the rescue. They may have a very high interest rate if you look at the APR but understandably so. Why? Because they involve a higher risk!
The fact is, once you can handle a car title loan then you can handle any type of loan and you will probably be in a better position to handle the credit system better.
- Bad Credit History and a Second Chance
If you have a bad credit history, banks usually do not give you a second look. In fact, even if you have a good credit history banks usually have to make you jump through all sorts of hoops. The requirements for car title loans are very clear and simple and almost anyone can qualify for them.
For example, if you live in California title loans in San Jose can give you a second chance if you have a bad credit score.
Sometimes, acts that are not totally your fault can ruin your credit score. For example, if you co-sign for a loan and your co-signer defaults on payments, it negatively affects your credit score. In addition, if you face identity theft and your card is misused it may also affect your credit.
With a car title loan, the main determinant is just your car title or pink slip. Car title lenders are usually very willing to loan you money. It is actually in their interest to do so because it is lucrative to them.
- Bankruptcy shouldn’t be the End of your Creditworthiness
After the financial crisis of 2008 that resulted in many foreclosures and bankruptcies, many people were not able to access money any more. Banks were less willing to loan any money because either they did not have it or they were just scared to do so. At the same time, people’s financial needs did not go away in fact they increased.
Many honest and hardworking people who could still manage to pay for loans felt the effects directly. Car title loans were amongst the few types of loans available to these people. To make it worse, bankruptcies and foreclosures affect individuals for years. This means that even after you have recovered you still are not able to access financial services just as you did before.
The scenarios above are an illustration of how alternatives to the mainstream banking system can be helpful not only to individuals but to an economy at large. Hopefully, they should help you better understand their importance.