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Are Car Title Loans Risky?

Money-ProblemsAre car title loans risky? The short answer is yes, but all loans have some elements of risk. There are risks for both the lender and the borrower. Whether or not a car title loan is too risky is best left up to the opinions of those involved. Here is a look at some of the risks involved in taking out a car title loan.

 

  1. Risk of default. With any loan, lenders take a risk that the money they have loaned will not be repaid. It doesn’t matter if the loan was for $20 or for $200,000. The borrower may never repay it. In the case of a car title loan, a lender like Embassy Loans, which is one of Florida’s leading consumer finance companies, has the right to take possession of the borrower’s vehicle. The lender can then sell the vehicle in an attempt to recoup its losses. Typically, the rate of default on auto title loans is around 15 percent, which is roughly the default rate on payday loans and loans from a pawn shop.

 

  1. Risk of damaged credit. A borrower that chooses not to repay a car title loan for whatever reason will see his or her credit history suffer. Paying your bills and paying them on time is one of the biggest factors when it comes to calculating a credit score. Failure to pay off a loan will do damage to one’s credit history and will have an effect on future credit decisions and even future employment.

 

  1. Risk of repossession. A borrower that chooses not to repay a car title loan also runs the risk of losing the vehicle. If a borrower goes into default, the lender can take possession of the vehicle. This is part of every car title loan agreement. One of the great things about vehicle title loans is that the borrower continues to get to use the car or truck while the loan is being repaid. When the borrower defaults, the vehicle can be repossessed. While repossession is a risk, it typically only occurs in roughly five percent of all car title loans.

 

There are elements of risk in every loan; it is inherent when money is being lent. Lenders face the risk of not being repaid their money. Borrowers face the risk of losing their property and damaging their credit histories. While there is some risk involved, most car title loans go off without a snag. Defaults occur in less than one in five loans and repossession is even less common.



Embassy Loans is a leading provider of auto title loans since 2005

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Embassy Loans Inc. is licensed under the “Florida Consumer Finance Act” and as such Embassy Loans is exempt from any licensing requirements under the “Florida Title Loan Act” to the extent that any of Embassy Loans’ activities involve the making of a loan of money to a consumer secured by bailment of a certificate of title to a motor vehicle.

Monthly Interest Rates range from 1.5% to 2.5% (18% to 30% APR), with 15-18 Month Terms.

No Prepayment Penalties!

Embassy Loans uses “Title Loans” for advertisement purposes only and provides auto equity loans. Embassy Loans Inc. is licensed under the “Florida Consumer Finance Act” under Florida Statute 516 and as such Embassy Loans is exempt from any licensing requirements under the “Florida Title Loan Act” to the extent that any of Embassy Loans’ activities involve the making of a loan of money to a consumer secured by bailment of a certificate of title to a motor vehicle.

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Frequently Asked Questions

What is an Auto Equity Loan?

An auto equity loan, sometimes known as a car title loan or a car equity loan, is a type of loan that allows you to borrow money by using your vehicle as collateral. The loan is secured by your vehicle, meaning you agree to use the equity in your car to back the loan. 

What is an Unsecured Personal Loan

An unsecured personal loan is a loan that does not require collateral. Funds are provided based on your credit worthiness and your ability to repay. 

What Is the Credit Builder Program

The credit builder program is designed to help individuals establish or improve their credit score with the primary purpose of building a positive credit history through regular payments.

Can i have more than one Loan at a time?

Embassy Loans can only extend one loan at a time and it’s advisable to start with one and focus on making payments in a timely manner to prevent default.

What happens if I miss a payment?

Missing a payment can have negative consequences, including late fees, a drop in your credit score, and potential default on the loan. Consistent, on-time payments are crucial to benefit from the program.